Look customers in the eyes to lock them in the aisles.

Shopkeepers adopt the hard sell with some tailored software, writes Mark Russell.

IN THE film Minority Report set in 2054, a brewer’s advertising billboard identifies Tom Cruise’s character, John Anderton, through a retinal scanner. As he walks past, the billboard calls out: ”John Anderton! You could use a Guinness right about now.”

Far-fetched? Not according to retailers who believe this type of targeted advertising may well be the future of shopping.

New York company Immersive Labs is already using built-in cameras and facial recognition software in its outdoor billboards to determine the gender and age of passers-by so it can customise the advertisement on display to suit them and prompt sales.

So if a man strolls by on a cold morning, the display might change from an ad for women’s clothing to an advertisement suggesting a cup of coffee at a nearby cafe.

As Australian online shopping – expected to be worth $21.3 billion this financial year and $30.8 billion by 2015-16 – continues to threaten bricks-and-mortar businesses, retailers are using the latest technology, combined with social media, including more shopping apps, to lure customers back into their stores.

German shoemaker adidas is planning to install touch-sensitive display walls in stores from next year. The virtual footwear wall will allow customers to view the company’s entire range of 4000 pairs of shoes. If a customer likes a particular shoe the store will order it in.

Two cameras above the screen will watch shoppers’ reactions to determine which shoes are most popular. And like other companies, adidas is also gathering feedback by encouraging customers to use Facebook and Twitter to review its products.

Brisbane company Yeahpoint believes its MiMirror creation is the missing link between instore shopping and social media that will revolutionise fashion retail.

MiMirror is a touch-screen display with a camera that acts as a mirror and takes up to six photographs of customers in outfits they are considering buying. The shoppers then email the images to friends or post them on Facebook to get a second opinion.

No retailers have installed the technology yet, but the company is confident major stores will buy the device in coming months.

”The factors driving retailers’ decisions for the future are basically that the cost of business continues to increase and competitiveness in the retail environment is being challenged by the online market,” Yeahpoint’s John Anderson says.

”On the flip side, you have the time-poor consumer who wants to have a much more friendly, fun shopping experience.”

Sean Sands, of Monash University’s Australian Centre for Retail Studies, agrees, saying many consumers are bored with traditional retail and the only way to lure them back into stores is to offer the latest technology linked to social media.

A recent report released by the centre found that online shopping was creating tougher in-store customers because they were ”better informed due to the power of the internet”.

Half the population now research their purchases online before setting foot in a store.

Many are also armed with a wide range of shopping apps that can be downloaded on to iPhones, iPod Touches, iPads and other tablets and smartphones, that allow them to hunt for the best deals.

The RedLaser app, for example, allows instore shoppers to scan the barcode of an item to get the price and then checks online to see if it’s cheaper elsewhere.

Supermarket giant Coles’ ShopMate app, which notes specials and lets you cross off your shopping list as you go, has been downloaded 400,000 times.

Rival Woolworths does not have a shopping app but has one to locate missing trolleys.

Woolies’ app-lessness is not likely to last, however, as retailers respond to consumer demand.

Russell Zimmerman, of the Australian Retailers Association, says ”every retailer has to be in the online space in the foreseeable future” or they won’t survive.

According to PayPal, 8 million Australians buy goods using the internet, and one in 10 buy them with their mobile phones.

Google Australia’s head of retail, Ross McDonald, says this increasing use of mobile phones to search for stores and products has become a noticeable trend in the past six months.

Previously, 95 per cent of online traffic for shopping searches was from computers but 16-18 per cent of online inquiries were now from mobile phones. ”What we advise retailers is that it’s not so much about the app but making sure you are visible on a mobile device when someone searches for you,” he says.

Jo Lynch from Myer – which has an iPhone app that lets you peruse and buy goods with a tap of your finger – says the company expects its online business to generate sales of $5 million for 2010-11 and be worth up to six times that in the next few years.

David Jones’ Brett Riddington says the future of shopping is all about multi-channel retailing. ”Many customers will still want to go in-store to physically see the goods after checking them out online, but we need to make that a more entertaining and engaging experience,” he says.


Costco readies first Australian outlets

Costco Wholesale, the largest US warehouse club, expects to lower Australian grocery prices with its first outlet in the country, providing new competition to Woolworths and Coles.

Costco, which will charge as much $60 in annual membership fees to Australian customers, will open its Melbourne outlet Aug. 17 with a 14,000 square meter (151,000 square feet) store, almost three times the size of typical supermarkets.

”We operate with low margins and with our membership fees, we can sustain low margins,” Australian Managing Director Patrick Noone said in an interview. ”Lower prices are important because people shop with us to get value.”

The Melbourne outlet, located in Docklands on the fringe of the central business district, will be followed by a store in Sydney’s western suburbs before Costco looks at more openings in the nation of almost 22 million. The Washington-based retailer enters a market where Woolworths and Wesfarmers’ Coles unit control almost three-quarters of retail grocery sales.

”We’ll have to see a competitive response from Coles and
Woolworths,” said Saxon Nicholls, at Herschel Asset Management in Melbourne. ”The Australian retailers already have substantial scale in the market and it will depend on Costco getting its own scale in Australia.”

Fundamental difference

Costco’s impact on rivals may extend beyond any market share it wins, with the company’s practice of pricing goods as much as 15 per cent below rivals likely to influence perceptions of value, according to analysts at Macquarie Group.

”Membership fees allow Costco to operate at low margins and are a fundamental difference in the business model,” Macquarie said in a July 7 note to clients. ”All other retailers of like products could be forced to price within these bounds depending on consumer response to Costco.”

Noone, an Australian who has worked for Costco for two decades, said the size of the Australian network will depend on the success of the first two outlets, with the company typically targeting a ratio of one store per 500,000 people.

”It all depends on how well we do what we say we are going to in Australia,” Noone said. ”When I was in Canada we started building warehouses to that ratio but when I left our brand name was such that we could build to 200,000 or 300,000 people and have a successful store.”

Vegemite, not peanut butter

The Australian outlets will carry about 3,800 product lines, compared with 27,000 in some Coles outlets, with some variation for local tastes. Instead of bulk packages of peanut butter popular in the US, Costco may stock items such as large sizes of Vegemite.

While both Coles and Woolworths trial hardwood floors, redesigned fresh produce sections and new shelving in their supermarkets, Costco maintains its warehouse design with concrete floors, exposed light fittings and inventory stacked on wooden pallets.

The Australian unit has no plans to sell coffins, as some of its US outlets do, although Noone expects the product range to evolve as Costco gains acceptance from consumers.

”If we can get good volume we will stock it and sell it,” Noone said. ”We look at areas we can show great value and that is why we sell diamonds and liquor and candy and all the other things.”

Major supermarkets commit to unit pricing roll-out

Australia: The draft unit pricing code was finally launched this week, with major retailers committing to completion of the roll-out by the end of this year.

“Our members including Coles, Woolworths and Franklins have taken the initiative and all plan to have completed a full roll-out of unit pricing  before the year’s end,” said Margy Osmond of the Australian National Retailers Association (ANRA).

“We’ve always maintained our preference is for a flexible, cost-effective and nationally consistent scheme and the draft code reflects this.”

Unit pricing is the display of the price of a good per unit of measure and the code will cover advertising, as well as online food sales.

“This is a comprehensive scheme which covers all supermarkets which are over 1000 square metres in size,” said Osmond.

“This is a much better approach than a prescriptive state scheme which would be costly and complicated, with consumers likely to pick up the tab.”

Source: Retailbiz.com

Wesfarmers to create new supermarket chain

Wesfarmers is reportedly creating a new discount supermarket chain to replace the Coles Group’s Bi-Lo supermarkets, reports The West Australian.

Coles chief Ian McLeod told analysts last week that the new concept would be tested in pilot stores in Melbourne before being introduced nationally and could be bedded down by the end of the financial year.

Coles, which was acquired by West Australian conglomerate Wesfarmers last year, tried to phase out the Bi-Lo chain in 2006 by converting Bi-Lo stores to Coles stores. The move was a disaster, and alienated budget-conscious shoppers.

Retail analyst Rob Lake says the move to build a new discount chain “makes a lot of sense”.

“They left a hole in the market that was taken up by Aldi and IGA elsewhere, and that’s a mixture of the bargain supermarket shopper and people who like cheap goods,” he says.

“It absolutely makes sense. They made a mistake in closing them down.”

The new discount chain is part of several trials at Coles supermarkets, including testing to see if consumers accept a cut of about 30% in the product range, meaning fewer brands will be stocked within each product category.

ACCC opposes acquisition bid by Woolworths

The competition regulator has confirmed it will oppose the acquisition by Woolworths of a suburban supermarket outside Canberra, acting against the strategy of ”creeping acquisitions” by major retailers and leaving an opening for an independent operator.

Details of the proposed acquisition by Woolies of the Karabar supermarket in Queanbeyan were aired during hearings held by the Australian Competition and Consumer Commission’s inquiry into the grocery industry in April.

The hearing heard that independent supermarket owner Supabarn Group, headed by Canberra businessman Eric Koundouris, had been negotiating to buy the supermarket, but had been ”gazumped” by Woolworths.

The hearings also heard of concerns over the strategies used by Woolies and Coles, such as restrictive leases and using planning laws to stop rivals, in order to maintain their retail duopoly.

Today’s statement by the ACCC follows a preliminary report last month indicating it was inclined to take a strong line against the acquisition. It opens the way Mr Koundouris to buy the supermarket.

ACCC chairman Graeme Samuel said he had concluded the acquisition would be likely to substantially lessen competition.

If the deal proceeded, Woolies would own three of the four full-line supermarkets in the Queanbeyan area, or three out of five if the smaller Aldi supermarket was included, he said.

Mr Koundouris told Mysmallbusiness the decision was a ”win for competition and consumers”, saying he believed it was the first time the strategy of creeping acquisitions by the larger deep-pocketed retailers had been successfully challenged.

”It’s a good step but if the government is really serious about keeping the lid on grocery prices and inflation, more needs to be done,” he said.

Mr Koundouris called on local councils to be allowed to assess planning applications for new sites on competition grounds, so that smaller operators had a chance to bid for sites, rather than being passed over by developers in favour of the cashed-up majors.

The ACCC said Supabarn supermarkets offered a different proposition to existing operators in the local market and created greater consumer choice and enhanced competition.

The ACCC is expected to deliver its report into the grocery industry to the government by 31 July.

Major Supermarket giants force higher grocery prices: association

The market domination of supermarket giants Woolworths and Coles means consumers faced higher prices, the chairman of the National Association of Retail Grocers of Australia says.

John Cummings, who is also a part-owner of three independent Perth supermarkets in Perth, said grocery suppliers were also “being done over on a daily basis” due to a lack of competition in the grocery sector.

Speaking today at the National Press Club in Canberra, Mr Cummings said the dominance of the big two had grown to such an extent that some analysts estimated their combined sales now accounted for close to 40 cents of every retail dollar spent in Australia.

He said the market share enjoyed by Woolworths and Coles, estimated to be close to 80 per cent, was unparalleled anywhere else in the developed world, adding that in areas where only Coles and Woolworths operated, prices were usually higher.

“Surely no-one believes that the cheapest petrol can be bought in a town or suburb where there is only one service station, no matter what the brand of petrol sold,” Mr Cummings said.

“Likewise, I would contend if you want cheap bread you will find the cheapest where there is a Coles, a Woolworths, and Aldi and a couple of large independent stores in close proximity.”

Mr Cummings said that in a recent trip to Sydney, he priced a basket of goods at a shopping centre where only Coles and Woolworths operated.

He said the prices of the goods were the same in both stores but five per cent higher than in his own stores and Woolworths and Coles stores in Perth. Suppliers were also at the mercy of Coles and Woolworths, he said.

“… manufacturers of our foods in Australia are being done over on a daily basis by the practices of those two companies,” he said.

“In its submission to the Australian Competition and Consumer Commission inquiry, George Weston Foods pointed out that the increasing introduction of private label products by the chains has put pressure on Australian food and grocery manufacturers.”

“They acknowledged that all of their brands were at risk of being delisted by Woolworths or Coles, and that many enduring national brands are disappearing because of the exercise of marker power by the two supermarket chains.”

He said the current inquiry into grocery prices being conducted by the Commission would undoubtedly receive mixed messages regarding pricing and pricing practices around Australia.

But he also suggested the Commission had so far failed in its responsibility to ensure and encourage competition grocery markets.

“I think in that instance they have failed, I don’t think you can look at it any other way.”

“As a matter of fact, it would appear that the regulator has been sitting in the stands cheering on Woolworths and Coles since 1974 as the growth in market share has been constant and consistent.”

Woolworths, however, disputes the claim it and Coles enjoy an 80 per cent share of the Australian grocery market, saying their combined share was closer to 50 per cent.

“We calculate our (market share) to be about 30 per cent and Coles’ to be probably be under 25 per cent,” Woolworths spokesperson Clare Buchanan said.

Ms Buchanan said the figure of 80 per cent stemmed from data supplied to marketing information company ACNielsen.

But she said that only three firms – Woolworths, Coles and Metcash – had supplied the relevant data to ACNielsen.

“So if you want to say we have 80 per cent of the market, that’s fine, but that’s only 80 per cent of Coles, Woolworths and Metcash (sales).”

“It’s a very, very narrow determination that actually misses a huge chunk of the food retail market.”

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