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Retail survey shows physical stores are far from dead

The Big Issues in Retail survey ask retailers about their business decision making each year.

While online sales are growing, retailers are not abandoning their physical stores, Massey University’s latest Big Issues in Retail survey shows.

When it comes to building customer loyalty, improving the instore experience has been rated by retailers as more important than any other factor.

Report author Professor Jonathan Elms, who holds the Sir Stephen Tindall Chair in Retail Management at Massey, says the importance of physical stores was one of the strongest trends to come out of the survey.

“Despite all the rhetoric we hear about the internet taking over, retailers still value their physical presence,” he says. “Within the overall mix of retail channels, stores play a particular purpose – and that purpose has changed over the years. They are now a physical manifestation of the brand.”

Professor Elms says this is translating into more attractive, and often unique, retail environments that aim to create an “experience”.

“It’s not all about sales; it’s about displaying and promoting the brand and the values of the organisation. Retailers understand that valuable consumers buy across a number of channels and a good store is good for the brand, even if a growing amount of the sales are happening online.”

The trend can be seen in flagship stores like David Jones, Sephora and even the new 24-hour Kmart in Sylvia Park, Auckland, he says, but having a strong store presence is not limited to large retailers.

“The bigger retailers are probably putting more energy into their flagship stores, but small, savvy retailers also realise their stores are a physical catalogue that they can use to really accentuate their brand within their communities.”

Professor Jonathan Elms.

Skills shortages continue to be a challenge

The survey also showed a small downturn in business confidence and continuing concerns about capability and securing talented staff.

“Many retailers, especially larger ones, say they often recruit from overseas for senior leadership positions. Consumers are becoming more and more demanding, but retailers can’t find the people with the expertise to deliver the technology and service levels required.”

Professor Elms says larger domestic retailers feel like they are facing multiple challenges.

“Alongside the domestic reasons for low business confidence, these companies are grappling with staffing issues and the spectre of big, global players entering the New Zealand market.

“The arrival of the likes of Costco and Ikea are good for the consumer, but it is creating nervousness among retailers.”

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