Creating
precincts of like products, or similar lifestyle products, in the general
merchandise area of our market is a hot issue for traders. Almost two years ago
a pro-grouping article was published on these pages and the reaction was
clearly against the proposal. Times have changed - well actually they haven't
because we are still battling a retail recession, but our customers have become even more empowered, and the search for ways to appease the wishes of our customers
has caused some traders to re-think their approach.
Another
article on Victraders this week talks about the importance of convenience for
customers. It attempts to show that convenience is probably the single most
important driver of customer responses. It has been said that opposition to
precincts is a manifestation of a trader’s most selfish business survival
instinct - "Give me the best chance of getting a sale by keeping my
competitors well away." “I'm not interested in giving the customer
convenience, I just want the sale." Spreading competitors around our
market, so that essentially customers have to walk the whole market to check
out all their options, is inconvenient. And the point is that if you make the
shopping experience difficult or inconvenient for your customer, they will stop
coming, and nobody gets the sale no matter where they are positioned.
In
the supermarket game, Aldi and Lidl are on the right track. Keep the offer
simple, and convenient for customers. Woolworths and Coles are battling that
trend right now as they lose ground and are forced to reduce prices to maintain
market share. We know from the department store war that simply reducing prices
is not the answer.
And
let's address the most common defence of a non-structured market - "Many
of our customers like walking the whole market. It is all part of an
adventure." That is true, but only for one group (admittedly the most
important for the top end), our tourist visitors. As a generalisation, they are
in holiday mode, and happy to browse, potter, and stroll. But what about the
other shoppers, those that are time poor, and looking for convenience? They may
not be the core customer for the top end of QVM but maybe that is because we
don't cater to their needs. And will tourists stop coming if we create
precincts? That seems highly unlikely. Tourists are going to casually browse no
matter how we set up our market. They are less likely to want to "hit and
run" whereas locals need that option. And let's not forget that the huge
growth of apartments around our market is creating more "locals" than
ever before.
We
need precincts for a whole lot of reasons and one might be that it will help sort
out the un-competitive traders and address the issue of repetition in many
categories. Reducing repetition is good, forcing out traders is not good, and
there would need to be a comprehensive readjustment program for struggling traders
including a dignified exit plan if necessary.
The
point of a precinct is that it creates its own energy. It becomes greater than
the sum of its parts because the total picture is provided in one place. A
precinct becomes a destination and each participant is forced to create a point
of difference that enhances the end result for the consumer. Sameness is out,
focus, depth and variety are in, and essentially that is what consumers want.
It is no accident that the most successful parts of our market, the fresh food
areas, are grouped in precincts
This
is a complex issue. It is scary, and uncertain, but the first group of traders
in the top end that agrees to establish a precinct and create a desirable
destination may just reap rewards and find a way out of the retail recession.
That has got to be worth a try.
By
Greg Smith
Have Your Say - click here.
COMMENTS:
24/06/2016 19:43:54 Precinct "We already have precincts
Dairy Hall
Meat Hall
Fruit Stall and
General Merchandise
Leave it alone "
COMMENTS:
24/06/2016 19:43:54 Precinct "We already have precincts
Dairy Hall
Meat Hall
Fruit Stall and
General Merchandise
Leave it alone "