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.