Discussion
The rise in technological advancements, ecommerce and the advent of the internet has completely revolutionized the field of retail and commerce. The concept of brick and mortar stores has become relatively obsolete nowadays. This is because the present generation of customers prefers to do their shopping online and through applications available on their smartphones, instead of actually visiting stores. In Australia, the retail industry has been affected by the various disruptive forces which include changing market trends, evolution of customer demands and expectations and changing buying behaviors and patters of the customers. Moreover, a large number of international businesses have penetrated the market, which affects the retail industry. Additionally, customers have become all the more tech savvy, busy and affluent. They have sky high expectations from retail stores and are not willing to settle for less. In the following report, the future of the retail store in Australia will be examined with respect to Coles Australia.
Coles was founded in the year 1914 and is one of the most well known supermarket, consumer and retail services in Australia. The company has its headquarters in Melbourne and has over 800 retail outlets in different regions of Australia. Coles has been one of the most beloved retail stores for Australians, providing daily and basic amenities at pretty reasonable prices. As of 2017, the annual revenue for Coles has been approximately 35-40 billion Australian dollars. If one is to study the current operations of the company, it can be said that market competition is one of the most potent threats in the long run. According to Balasescu (2014), the innovation in the field of ecommerce along with the implementation of state of the art technology has completely altered the retail industry and even poses a serious threat to its future. The article is a detailed explanation on the nature of retail, and how the modern trends can be applied to it. If the principles of the article are applied to Coles, it can be said that it faces severe competition from various other retail stores like Aldi. Moreover, the retail industry in Australia is also open to new entrants. As a result, several international brands have made their way into the market thus affecting the sales rates and profitability of Coles. Although the online retail industry in Australia is still in the exponential phases, it can be said that they too pose a challenge to Coles and its current operations. Coles Australia has also been facing a number of logistical and technological challenges which have rendered them outdated and on the verge of becoming obsolete.
Gregory (2015) is of the opinion that the Internet of Things has completely altered the retail industry by reducing the significance of brick and mortar retail stores. According to the author, internet connectivity and easy access to devices have changed the way customers live and shop, thus changing whole industries. The Internet of Things has certainly added more connectivity and intelligence to the way consumers perceive retail industries. Moreover, this also paves the way for more relevant customer related information which can further be incorporated into business operations. Commonly known as big data, this information can be used to improve the overall operations of the business, provide better service to customers and also shape the business for future changes. The Internet of Things is an innovative new concept which holds a world of opportunities for the retail industry. It has now become possible to connect customers and business activities in the digital realms. There are essentially three areas in which the retail industry would be affected by the incorporation of internet of things – the supply chain, the customer experience and generation of more revenue streams and newer channels. Internet of things would allow retail stores to communicate and interact with their customers in real time, enabling bidirectional communication transactions. One of the major factors that promoted the concept of Internet of Things is the increasing popularity of the smartphone. However, in the case of Coles Australia, the same old brick and mortar stores have begun to lose their charm. In a world where Internet of Things and the use of superior technology enables customers purchase their groceries and other items online, Coles may observe a significant decline in customer retention and customer satisfaction rates. Unlike online retailers powered by the Internet of Things, Coles is unable to gather optimized data on customer needs and demands. In other words, they are unable to provide customized service delivery which plays a key role in customer satisfaction and retention.
Current operations and issues faced by Coles
According to Steel et al. (2013), the rise of ecommerce has had an irreversible impact on the conventional retail industry in Australia. The article claims that in New Zealand in 2011, consumers had spent almost three billion dollars online, which rapidly grew to almost four billion dollars in the upcoming fiscal year. The article identifies that there are two main benefits that online retail offers to customers, which makes them opt for ecommerce websites and applications over brick and mortar stores. They are – the variety of products available on online stores and the lower price rates offered. In the context of New Zealand the rest of Australia, these two factors play a crucial role. Through online retail stores, customers would easily be able to browse through a variety of goods that may not be available in traditional stores. Moreover, they would also be able to get discounts and offers, which are profitable for the customers. With benefits like this, there is no reason as to why customers would prefer traditional brick and mortar stores over online retail stores. This is also one of the reasons why the popularity of Coles as Australia’s premium retail store has declined. Coles has maintained its service and product quality at a consistent rate. They have a definite range of products, which have remained almost unchanged over the years. As such, customers are finding it more beneficial to use products sold online, since they guarantee better variety and more improved quality and service delivery.
Ramcharran (2013) is of the opinion that there are a few factors which have contributed to the change of the retail industry structure. The growth and rise of ecommerce has altered the shape and size of the retail industry worldwide. The ecommerce industry with respect to retail is still a developing industry, with opportunities for low market shares and fast growth. A large number of online retail stores are also offering services like drone shipping and same day delivery. Low transaction expenses and the proliferation of fields like information technology have also made it easier for retailers to venture into ecommerce. Coles has indeed taken requisite measures to incorporate online shopping as part of its services. But Coles Online is not a very reliable platform for the customers. It is not interactive or optimized to meet the needs of the customers. Moreover, Coles Online is mainly restricted to its grocery shopping, which may prove to be inconvenient for the customers.
However, a different view has been provided by Dorman (2013). According to this author, the rise and growth of ecommerce has certainly altered the course of the retail industry. As a matter of fact, internet and information technology plays an integral role in multi channel online retail. As a result, a number of customers are choosing to buy their goods online, instead of brick and mortar stores. As a consequence, the future of traditional retail stores was under scrutiny. Yet, the author claims that retail stores at present may have observed a marked decline in revenue outcome, but they still remain relevant. The author opines that brick and mortar retail stores are indispensable as far as direct to consumer business models are concerned. Coles, despite the numerous market challenges, has managed to retain a large number of its loyal customers. They have implemented a loyalty program which remains a favorite amongst their customers.
Based on the analysis of the future of retail stores in Australia, some strategic recommendations can be made for the company:
- Coles will have to take adequate measures to collaborate and coordinate its strategic policies with that of customer taste. A generalized customer service policy would be insufficient in meeting the needs of the customers. The retail customers today are tech savvy and have very high expectations from brands like Coles. As such, the company would have to incorporate information and data related to customer needs into its strategic operations. This can be used to improve its supply chain and quality of service delivered to customers.
- Coles would also have to take measures to improve its online presence. Coles Online at present is quite a primate online application, which would have to be improved. Increasing the variety of products sold online, lower pricing strategies and improved website interface would help in enhancing the competitive positioning for Coles.
- Internet of Things or IoT may be incorporated by Coles as part of its online retail. IoT would not only improve the delivery of service to customers but also make it cost effective. It would also provide in depth insight into customer buying behavior and motivational factors, which could further be used to improve customer satisfaction rates.
Conclusion:
To conclude, it can be said that the traditional retail industry faces a tough challenge in the future, owing to a rise of ecommerce and online retail stores. For brick and mortar retail stores like Coles, the growth of ecommerce poses a severe threat. The lack of improved online stores and the myriad benefits that online retail stores offer has reduced the profitability and affected the sales of stores like Coles. The above article analyzes the future of retail in Australia, providing viewpoints for and against the argument. Accordingly, the situational analysis of Coles has been provided along with the strategic issues it has been facing. Recommendations have also been provided to improve the online presence of Coles.
References:
Balasescu, M., 2013. The influence of innovations and technology on the future of retail. Bulletin of the Transilvania University of Brasov. Economic Sciences. Series V, 6(2), p.9.
The research article focuses on the impact of technological advancement and innovative ideas like ecommerce on the future of the retail store.
Dorman, A.J., 2013. Omni-channel retail and the new age consumer: An empirical analysis of direct-to-consumer channel interaction in the retail industry.
This article studies the relevance of traditional brick and mortar retail stores in the age of ecommerce and technological advancement.
Gregory, J. (2015). The Internet of Things: revolutionizing the retail industry. Accenture Strategy.
This article explains how the Internet of Things has revolutionized the retail industry by improving quality of service provided to the customer.
Ramcharran, H., 2013. E-commerce growth and the changing structure of the retail sales Industry. International Journal of E-Business Research (IJEBR), 9(2), pp.46-60.
This article emphasizes how the growth of ecommerce has completely altered the field of retail industry, affecting its sales and profitability.
Steel, W., Daglish, T., Marriott, L., Gemmell, N. and Howell, B., 2013. E-Commerce and its effect upon the Retail Industry and Government Revenue.
This article emphasizes on the fact that ecommerce has affected the revenue generation of various retail industries, by altering the way customers perceive traditional retail stores.
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