Seldom has there been a Christmas period with more at stake for Australian retail marketers with the news that US-based retail behemoth Amazon is starting up operations in Australia.
Amazon started small, launching a trial with a select few customers immediately before the global Black Friday online sale period kicked off — but just in time to generate plenty of free publicity for Amazon’s Australian operations just as the pre-Christmas retail period kicks off in earnest.
So what will this mean for the retail brand landscape? Currently Australian retail sales average about 7.4% of spending, set to double over the next 5 years, according to research firm IbisWorld.
But Amazon plans to undercut local retail prices by as much as 30%, IbisWorld says, meaning it is targeting a disproportionate share of the online retail dollar and is likely to be a big force for disruption.
Existing retailers are not taking this lying down, of course. Some electronics retailers started their Black Friday sales early. Others went even earlier, discounting big-ticket items at Click Frenzy, a week earlier, and aside from that, many other, longer-term strategic plans have been put in place.
Around 40% of shoppers are motivated by price, according to PwC, so local retailers must be competitive with their global competition. But that doesn’t mean dropping prices across the board.
So how can retailers get savvy this time of year? Here are some tips…
1. Be strategic with pricing
“You need to be strategic about the areas of your business where you face the most serious competition in order to start a price war you can win,” PwC says in its report, Five Radical Changes to Survive in a Changing Retail Market.
“Focus on value perception – it’s not necessarily about being cheaper on every item. Understand your business so you can choose your battles in a price war. For premium brands, look at innovative pricing models to change the perception of price positioning.”
Other recommendations including reducing your range by 25%, closing down the 25% least profitable bricks-and-mortar outlets in your network and joining forces with your rivals by partnering with a frenemy – some radical recommendations indeed.
2. Consider marketing operating costs
Less radical but no less important is the recommendation to refocus on core activities and reduce operating costs.
In retail marketing, cost reduction often means a change in advertising budgets: reducing the frequency of advertising in traditional print outlets, for instance, spending a greater share of budget online, diverting more of that spending towards programmatic advertising.
But what if you could just figure out how to use your existing marketing and creative resources more efficiently and get the same results?
Retail agencies are typically much more efficient than traditional creative agencies and well-versed in the use of templated formats, for example, to minimise production time and maximise output.
3. Tackle marketing bottlenecks
With so much going on, chief marketing officers and marketing operations managers can sometimes get sidetracked when it comes to streamlining how marketing runs.
Just knowing which areas of your marketing operations are working well, and identifying where the bottlenecks are will be a major benefit for retailers looking to improve their game this retail season.
Add the full benefits of a modern marketing resource management system and planning, resource allocation, budgeting, efficient use of your existing assets and compliance become that much easier.
According to Aquent, the biggest savings of an MRM system are typically made in internal costs.
With disruption and cost-competitiveness soon to be more of an issue in Australian retailing than ever before, who can afford not to get the best possible performance from their marketing operations?
Simple helps marketing teams plan, review and optimise their retail marketing operations. To find out how we can help your team be faster and more efficient, Book a Demo.