It's a global market, thanks to the net
Retailers are in the eye of the disruption storm. But in a connected, data-rich world, they have a global customer base within their reach. A round table hosted by The Australian's retail writer Eli Greenblat examines the challenges
Eli Greenblat: Traditional retailers such as Myer or Woolworths have about 5 per cent of their sales online, but they would dream of having 10 per cent. With Domino’s, you have more than 50 per cent coming from online, probably one of the largest for any national retailer in Australia. How has that shaped your business?
Don Meij: Look, it has made our business more productive. We used to spend 12 per cent on advertising and now we spend about 7 per cent because we’re in a one-on-one relationship with the consumers through social media, where we have more than a million social media fans. From a productivity point of view, the amount of labour we’re able to pull out of the stores, as well as the efficiency that comes from the way we’re marketing to our consumers … I don’t know how we can compare it any more because it it’s s been going on for so long, but it’sit s 25 per cent and higher than our current offline. So if we do Apple Watch – Apple Watch is everywhere – you can immediately connect, you can immediately go out to your customers. In the old media it used to take three weeks to become saturation winners, now we become saturation winners in three or four days. We don’t do prime-time television any more because it is a negative return on investment.
You can measure it. Is that important to your business?
Don: There’s so much money on the table now that we can see our only limitation is the ability to execute … So you just get awareness, awareness, awareness, and then how quickly you can get to all of that and analyse that. We built one piece of technology a year in 2006, three years ago we were building three, this year there will be 25 and next year it will go to 40. And each of those is triggering consumption or productivity enhancements or whatever. So it’s not like: are we going to do it ourselves? We’re going to do it ourselves. Are we going to be a lot more profitable? We’re going to be a lot more profitable. The pace depends on our ability to execute. How we’re developing ourou team, developing our business partners.
Are Australian bricks-and-mortar companies behind the United States in terms of online sales, as the percentage of total sales for traditional retailers?
Anna McPhee: [Figures show that] about 18 per cent of the last transaction done by a consumer was online, and the rest was in bricks-and-mortar or via mobile. Only a relatively small percentage of the population is using online as their preferred type of shopping, but it’s all a mix. A consumer’s last purchase might have been online, but 80 per cent might have been with bricks-andmortar retailers.
How are retailers coping with this massive pace of change?
Anna: Retail has been disrupted throughout time. It continues to evolve from the local family corner store, to the general store, to the department store, to the supermarket. Now pure-play online stores are evolving to incorporate bricks-and-mortar. It’s a sector that’s been under constant revolution or evolution.
Don Meij Group chief executive Domino's Pizza Anna McPhee CEO, Retail Council
Paul Greenberg Executive chairman National Online Retailers Association