The Dangers Of Risk-Averse Retailing

There is an undercurrent in the Australian retailing marketplace that is calling into question whether Aussie retailers are too risk averse, and are therefore suffering in the innovation section of retailing.

While it has been said that innovation and risks go hand in hand, the current view of market experts is that Australian retailers are, to quote former Pacific Brands marketing manager Vicki Stirling, “a bit afraid” of innovation.

This is an interesting point raised at a crucial time in the Australian marketplace. With the volatility of the international trading landscape coupled with the constant yo-yoing of the Aussie Dollar against the greenback, so called “risky” business ventures in the retailing sector are more often than not overlooked in favour of tried and true methods. What this does not take into account is the constant craving for the “new” experienced by consumers in all formats. 

Innovation can be defined as the application of better solutions that meet new requirements, inarticulate needs, or existing market needs – and that consumer craving arguably comes under all three of those banner areas.

Michael Wittner, Co-CEO of footwear brand Wittner Shoes, has said that the integration of new technology with bricks and mortar retailing is set to drive this innovation, and that the future take-up of the “mobile wallet” in Australia will drive huge increases in the retailing sector. We have all been a part of the gradual shift from currency to manual electronic payment, to tap-and-go payment. Mobile payment optimises the tap-and-go opportunities, clearing the way for a forecasted explosion in pop-up style stores across the country. This driving innovation in the retail sector will put even further strain on the classic bricks and mortar retailer to innovate in their own offering.

A good of example of this is the E-Mart “flying store” – Korean retailer Emart identified that people who are busy cannot always take the time to visit stores. To combat this, they created a “flying store”, a truck-shaped balloon that floated across a city, offering Wi-Fi access to the Emart catalogue and store, which ended up increasing online and mobile sales by over 150%.

What does this mean for us?

This is a real hot button issue amongst retailers – on one hand, how do you break through the everyday clutter of the retailing landscape while on the other hand not being too risky about it? The real danger of risk-averse retailing is being left behind. Who is going to see your weekly Press DPS when your audience is reading their news online? Who saw your cracker 30sec TVC that launched last night when your key audience was busy watching/reading about a TV series finale on the net? Retailers are finding themselves more and more at the mercy of the digital arena, and while as of now risk-averse advertising is heavily focused on your classic media, the dangers of avoiding the digital age may become clearer down the track.

The Importance Of Social Power

Week in and week out there are stories that stir up the social media behemoth around retailers and products. Often starting with the new go-to phrase “An Open Letter To…” the online furore around these issues rises and falls within the social sphere only – although sometimes this is not the case.

Over the last week there has been two stories picked up across the news media regarding social outrage against a product – one for Coles, and one for Woolworths. While they deal with very different issues, the overriding thought to be taken from this is the power that social outrage can bring to bear against retailers.

Coles Dry Fit Nappies

Firstly we will take a look at the Coles Dry Fit Nappies recall. Over the recent 12 months or so Coles has been driving their home brand offering in their advertising campaigns, including as part of their major Down Down campaign.

The story started last week when one customer (who had been sent the Coles Dry Fit nappies instead of her regular choice in her online shop) checked on her daughter after putting her down for a nap and found the nappy had frayed around the edges and her daughter was reportedly choking on a long string of the frayed parts.

The consumer posted her concerns on Facebook, and her post was shared over 35,000 times in the next 24 hours. Coles then responded by recalling all the Dry Fit nappies, withdrawing the product from sale, and “urgently investigating” the issue.

This is a cut and dried example of social power at work – and in the words of the consumer herself

 “I knew that if I put it on Facebook it would spread like wildfire to all the mums that need to know”

Woolworths/Durex Sex Aids

The other story to appear recently was the launch and withdrawal of Durex brand battery-powered sex toys from 900 supermarkets within the space of two weeks.

Originally lauded as a “game changer for the industry”, the product was removed after leading Christian group FamilyVoice Australia called for a nationwide boycott of Woolworths Supermarkets. In the words of FamilyVoice –

''Society is already suffering massive problems with young children being over-sexualised … this move by Woolies just makes the problem worse. I, personally, would not patronise Woolies while this situation exists and I encourage everyone else to boycott them too. I hope parents will let Woolies know how they feel and I hope they tell them they'll continue to shop elsewhere until these products are removed.''

While this is not social media at work per se, the reaction on social media and fringe media has been enormous. I won’t link to the stories here, but the depth of feeling behind this has been huge, and the social sphere is taking up the cause with verve.

While there is merit to both sides of the argument, whatever the decision ultimately taken Woolworths has been embroiled in a social media storm.

What can we learn from this?

While it is well known retailers have no control over what is posted on social media (apart from their own pages, which they are now by law responsible for) the responses garnered often show the public’s feeling towards the brands in question. In the two cases above, social media was (and indeed, is) playing an integral part in the reporting and outcomes of the issues faced by the retailers. Unfortunately there is no clear cut answer to “fixing” social media for a company when something goes awry, but it is important for us as businesses to understand the power that social media can wield.

Multi-Option Retail The Realm Of The Future

With the acquisition of clothing and homewares retailer EziBuy by supermarket Woolworths, the grocery giant is now touting itself as Australia and New Zealand’s largest “multi-option retailer.”

Woolworths chief Grant O’Brien referred to this move into the online retail world as providing a unique competitive advantage, off the back of the 2011 acquisition of Cellarmasters as a direct online wine retailer.

But supermarkets have been trending to this area for a while. While we have covered the rise of the hypermarket previously, as well as the entrance of Aldi to the Australian marketplace, we can see this trend continuing throughout the wider marketplace.  For some time specific gift cards were available direct from supermarkets, such as iTunes, and as of this week Woolworths (and Big W) are also exclusively offering Google Play Gift Cards. On the other wise of this, Coles have offered their own apparel label for sale via their supermarkets (Mix Apparel) for quite some time.

But where will the multi-option retail space move in the future? Where does the line between supermarket, hypermarket, and DDS begin to blur?

Earlier this year, Aldi held a sale for medical assistance equipment.

What it means for us: The Australian supermarket space is an exciting area of change – the future is uncertain for retailers, but with the constant movement and innovation that supermarkets go through to stay abreast of current trends set them in a good space to move into the online multi-option retail sector.

CineTAM Comes To A Theatre Near You

With the rapid rise of cinema as an effective marketing media (research shows cinema ads have six times the recall of TV), cinema advertising company Val Morgan have released CineTAM – a new audience measurement and projection tool to help advertisers optimise their cinema campaigns.

CineTAM captures depersonalised demographic details from movie visits made by over 450,000 Hoyts Rewards members combined with actual cinema ticket sales across Australia, fusing into a weekly tracking tool that will allow campaigns to be optimised in real time, similar to TV. It also allows for a h9igher transparency of campaign returns and audience measurement.

The second half to CineTAM is a new planning tool that allows Val Morgan to more accurately design a campaign to the advertisers needs.

For the moment, CineTAM is not accessible by media planners – it is purely bespoke to Val Morgan.

What it means for us: This is a fantastic new media metrics system in a crop of such systems being released. As the acquisition and access to new data becomes more pronounced, media are required to be more transparent in their reporting systems. We will keep a close eye on CineTAM in the coming weeks – as Supermarkets have a cinema campaign starting very shortly, it is a great way to gain first-hand knowledge of the workings of this new reporting measurement.

EMMA Tells Us What We’re Reading

Last week saw the launch of EMMA (Enhanced Media Metrics Australia) into the Australian marketplace. Developed by Ipsos MediaCT, a global audience measurement company, for The Readership Works, EMMA runs a survey of 54,000 a people, across every day of the week, and allows for a greater breakdown of readership, such as sections of newspapers as opposed to the overall publication.

Of course the biggest roadblock for EMMA is the incumbent measurement system in place with Roy Morgan.

From the first round of data released by EMMA, big differences have emerged in readership data than those released by Roy Morgan. For example, EMMA data suggests Roy Morgan figures have been seriously under-valuing the readership of most Australian newspapers, with some 1.17 million people reading The Daily Telegraph compared to 759,000 via Roy Morgan.

The flipside of that, of course, is that EMMA is over-valuing compared to Roy Morgan, but it’s impossible to tell which is more accurate. Publishing industry associations have come out in support of EMMA, which is unsurprising given it was an industry-backed endeavour (and is giving higher numbers).

Some more EMMA figures released for newspapers –

• Sydney Morning Herald: 45% higher than Roy Morgan (814,000 vs. 562,000)
• The Australian: 47% higher than Roy Morgan (540,000 vs. 367,000)
• Australian Financial Review: 32% higher than Roy Morgan (312,000 vs. 236,000)

Magazines have also garnered a boost from EMMA, with The Australian Women’s Weekly going from 1.6m to 2.3m.

While these figures reflect fantastically for Print media in Australia, many media companies are still testing the system.

What it means for us: Aegis Media’s current stance is that Roy Morgan is still the system to be relied upon until the new data has been tried and tested as a more correct reporting matrix. That being said, it will be interesting to watch the quarterly reports (and soon monthly reports) unfold from EMMA, and to chart the differences in audience between publications. It could be in the future we settle on a middle ground between the two measurement systems, as Roy Morgan has just come to market with a new crop of changes to Asteroid, including a greater granularity of data and the ability to create multi-year trends. Keep your eyes open for new information over the next few months.

Top 20 Programmes Trend

Based on Sydney Metro market

*Note - Coles have kept a steady percentage in the Top 20 each week, buying into key programmes week in and week out, while Woolworths has changed their TV strategy to be heavier later in the week, where there are less programmes that appear in the Top 20 (Top 20 Programmes generally air Sunday-Wednesday, with the exception of strip programming). This is slowly starting to change, with the final week showing an uplift from Woolworths.

TV Network Share

Network Share as at 25th of August

From the beginning of 2013 to now, Seven is leading against Total People, while they are on par with Nine as dual leaders for Grocery Buyers w/ Children.