Industry Tips

The changing face of the modern consumer.

How to adapt to the new kid on the block.

Call it what you will, a recession, a correction or a downturn – sticks and stones may break my bones but the effects will really hurt me!  Costs are up, consumer confidence is down and many retailers are struggling to make ends meet – whatever you call it, it is the fallout that needs to be addressed.

The state of the Australian and global economy has given way to the emergence of a new consumer model – one more attuned to the fluctuating trends on a national and global scale. 

The emergence of the modern consumer brings with it a demand for a new type of retail market – one which adapts and evolves in accordance with the needs of the new breed of buyer.

Below are some changing consumer trends and suggestions on how retailers can adapt: 

Consumer Change: Consumers are demonstrating a more attuned sense of social responsibility – they are interested in what retailers and manufacturers are doing in terms of corporate social responsibility.
Tips to Adapt: Go green and utilise your social responsibility as an opportunity to sell. Maximise the green trend by utilising recycling, sustainable materials, efficient lighting, renewable energy and off-setting your carbon emissions. 

Consumer Change: With all the doom and gloom forecasts and constant coverage of the ‘struggling economy’, people are looking for an escape. With the focus turned inwards, consumers are now seeking ways to improve their lives – primarily by improving the environment in which they live.
Tips to Adapt: Home makeovers are the key to economy escapism – look to visual merchandise products related to improving and updating the home space – anything from decorations and décor to feature pieces and furniture. Shoppers are inwardly focused; ensure you are appealing to their needs. 
 

Consumer Change: Shoppers now incorporate a new dimension – how a product makes them feel. Beyond wanting to know what a product does and how much it costs, consumers want to know how a product makes them feel when they use it. 
Tips to Adapt: Provide an opportunity for your shoppers to interact with the product – incorporate interactive displays that bring the product out of the box and into the senses of the consumer. 

Consumer Change: Education is key and demonstrates another way that consumers are inwardly focused and seeking to improve their lives with the things they can control.
Tips to Adapt: Incorporate an element of education in your store and provide the customer with an opportunity to increase their product knowledge. For example, you may sell gourmet food items –integrate some in store cooking demonstrations to show how to utilise your product. Furthermore, your customers will find the aromas impossible to resist.

Consumer Change: One thing that the modern consumer can still control is how good they look and feel and the permeation of wellness into our modern lives can not be ignored.
Tips to Adapt: Identify ways you can incorporate wellness into your store. For example, you may ask shoppers to drop their business cards in a bowl for a chance to win a luxury spa treatment – you get the contacts and the lucky shopper gets a chance to unwind.

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Visual Merchandising

Visual merchandising is a tool that retailers can utilise in their stores in order to attract and retain customers, especially in the current climate where customer attraction is becoming more and more difficult.

More often than not, individual retailers struggle to obtain the tools, education and finances they require to present their retail space in the best possible way to maximise sales. Visual merchandising incorporates window displays, in-store layout, product merchandising, housekeeping, lighting, music, price tickets, posters, graphics, props, colours and more – your ability to combine these elements, visually organise them and rotate them is fundamental to the presentation of your store. 

All that you require is a little creativity, inspiration, logic and organisation – and the opportunities are endless.

“When a retailing environment makes ‘visual sense’, a customer will be naturally attracted to the space, enticed to come in, convinced to stay and shop and, most importantly, inspired to buy,” says AUSVM.

The purpose of visual merchandising is to make your products look so good that people want to buy them. Following are some tips from the team at AUSVM (www.ausvm.com.au), the preferred visual merchandising supplier of Gift & Homewares Australia.

• STOCK STRATEGY: it is essential to strategise your purchases and ensure forward planning. Product knowledge and prior planning with regards to product placement in your store is vital. Two things to consider when purchasing stock are firstly, where will these products go when you get them back to your store?  Do you have the space for them? And secondly, do they appeal to your customers?  It is important that you are buying to appeal to your customer’s tastes not just your own.
• THE POWER OF POSTERS & PRINTS: source large format posters and prints to compliment product ranges, highlight window displays and to enhance in-store merchandising. For example, if you were creating an in-store display for a new range of dining ware, you may create a backdrop with a large colourful poster of food on a dining table or beautifully presented on a plate.
• UP IN LIGHTS: how many times have you heard someone make reference to great lighting –it makes an incredible difference to visual appeal. Good lighting is crucial to complete a visual display, by manipulating your light sources; you have the ability to enhance merchandise and displays, draw attention to particular products and create an in-store ambience.
• COLOUR ME HAPPY: whilst there are various eye catching colours that a retailer can use to draw attention to their stores, retailers must consider their overall look & feel in the context of visual merchandising. The most important thing to consider when contemplating colour is what the theme or mood is – it is the retailer’s ability to tell a complete story that catches the attention of the consumer.
• TEXTURISE TO TANTALISE: whilst colour is a no brainer when it comes to attracting and retaining customers, it is essential to make sure you have a variety of textures to alleviate visual boredom. Utilising textures and fabrics in the background of your displays will be instrumental in drawing the eye. Wall coverings have made a strong come back and are a great and inexpensive way to freshen up a theme. 
• PENNY PINCHING: times are tight and budgets most likely are not accommodating refurbishing and interior redesign; however retailers do not have to overhaul their entire look & feel to create an updated atmosphere within their retail space. Keeping in mind the general theme, retailers can create vignettes of colour around a theme to enhance a display and bring it new life.
• PROP ME UP: props are the starting point for displays that surprise, delight and sell – and they are far cheaper than an entire store makeover. You can integrate props with graphics to craft a work of art. For example you may create a wall display where a poster/print of a girl is extending a 3D arm to display accessories.  You may choose to integrate clever, relevant props into your product displays to become a signature element of your store.
• A DAILY DOSE: build a daily routine that ensures you make a concerted effort to visually merchandise your store every single day. This does not mean that every day you need to create new displays or revamp your window display; just a simple change here and there will create ongoing interest in your store. By creating something new for your customers to see, you are giving them every reason to come back to your store again and again.
• THE FEATHER DUSTER: housekeeping is a vital component of your visual merchandising program. Ensure that your store is always free of dust, dirt and rubbish, set time aside each morning to do a quick once over and make sure things are neat and tidy as they should be. No-one appreciates mess; it makes people uneasy and uninterested. A beautiful environment in which a customer would like to spend time does not involve dust or rubbish. Presenting a neat, tidy and organised store will create a welcoming environment that attracts customers to enter and stay longer.
• MUDDLE BUSTING: clutter free is the only way to be – there is nothing more distracting and deterring than a store full of clutter. The customer should never feel overwhelmed by your product range, products should be easily accessible and customers should be able to easily understand what you are selling. Your ability to tell your customer a story is significantly harder when your story is buried under piles of product. 

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Diversifying your offering.

An opportunity for growth.

Strategy is often the first thing to go out the window when times get tough and as the global economy continues to deliver blow after blow, many could be forgiven for contemplating only short term.

However, everyone knows that rash decisions and short term solutions are not viable options when it comes to good business sense. Diligent companies are now seeking options to stimulate growth and identify new revenue streams.

Product or service diversification is a growth strategy that many companies are implementing in order to remain competitive.

There are many steps involved before, during and after initiating diversification – here are some tips when considering diversifying your product and/or service.

• SWOT – Conducting a SWOT analysis will help you objectively identify Strengths, Weaknesses, Opportunities and Threats associated with implementing a diversification strategy. The procedure should include the input of all people associated with the business including family members, employees and management. It is essential that during this exercise, no ideas or opinions should be disregarded without analysis. Ensure that your SWOT analysis is honest to give you the best chance of evaluating suitability of diversification for your business. Honesty will assist in avoiding costly mistakes. 
• PRODUCTIVITY OF CORE BUSINESS – Before a business even considers the possibility of diversification, it is essential that the core business is running both productively and with succinct efficiency. Business owners and managers should clearly establish the core strengths and weaknesses of their operation to determine if diversification is a viable opportunity
• ASCERTAIN CRITERIA – After assessing the core business and determining suitability for diversification, the next step is to identify and set down certain criteria that the business would like diversification to deliver. For example – you may want diversification to increase sales volume and enhance your share of market. By setting clear criteria, businesses will not only have a clear direction moving forwards but also a list of criteria with which to critic the success of diversification
• BRAINSTORM – Your employees are at the very heart of your business – they are familiar with your clientele and are the first point of contact for your customer base. Take the time to brainstorm ideas with your employees, their knowledge of the day to day operations of the business and their ongoing interaction with customers sits them in good stead to provide ideas and feedback regarding diversification in your business
• SHORTLIST – After the brainstorming session, create a shortlist of diversification opportunities for your business. Focus initially on the related needs of your established market or on a market with similar needs or characteristics. For example, you may run a newsagency that sells an array of greeting cards, standard to the traditional newsagency offering. You could consider introducing a line of gift products into your store – customers who then pop into your store to purchase a card for someone’s birthday may then also be inspired to buy a gift to go along with it. Ideally you want to create a suite of products or services that relate wholly to one theme or family.
• EXISTING CUSTOMERS – When considering diversification, be sure to consider your existing customer base. Speak to your customers about what they would like to see in your store and identify ways that you could accommodate their requests. Leveraging off the feedback from your regular clientele, begin to consider how you can implement their needs whilst attracting an entirely new customer base simultaneously
• RESEARCH – Finding information is critical and essential to recognise past and present performance of the sector and its future prospects. Genuine and committed investigation into your current market sector and the area or areas into which you wish to diversify will assist you in better understanding market expectation. Determine if the sectors are relevant to one another and if the association will be credible and well received by your current and potential customers. Question how diversification will impact your brand image and determine if your business brand is strong enough to facilitate diversification into additional areas
• COMMUNICATION – clear, constant and concise communication is important to ensure stakeholders and staff are kept informed of plans and ideas around diversification. Informed personnel are more often than not the best place to seek feedback and invite discussion conducive to business. Communication with your customers and potential customers is also essential. External advertising or marketing of your new product range once it is in place may assist in drawing new customers to your store and introducing your new line to the public
• RESOURCE MANAGEMENT – Every new project and idea requires resources and time to make it a reality. It is important to consider your available resources before embarking on a mission to diversify – if all your available resources are channelled into the new project the core of your business will be likely to suffer. Readdress the allocation of your resources – including finance, time and man power – be certain that you have the resources to support diversification and that the rest of your business will continue to operate like a well oiled machine
• EDUCATION – Introducing a new product or service into a business will require dedicated time to introduce the new skills, techniques and knowledge required. It is vital that you take the time to educate and train staff on all aspects of the new offering to ensure their product knowledge is sound and that communication with the end customer will be both concise and persuasive.
• EVALUATION – The effectiveness of diversification is mixed and requires constant evaluation to determine where you can improve and ensure continued success. Ultimately, your accountant will be the obvious indicator of the success of your diversification – regular meetings will assist you in keeping track of how the diversification is sitting with the business bottom line. Another good place to seek evaluation is in your customers – speak to both staff and customers to gauge interest in the new product or service.

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Tips on Foreign Exchange

Some things you need to know about foreign exchange:

• In 2008 the Australian dollar experienced a 44% volatility range.   
• If you have foreign payables/receivables of $US500,000 per year, a 2.86% move by the Australian dollar can cost you more than $A19,000.
• If you have foreign payables/receivables of $US10,000,000 per year, a 2.86% move by the Australian dollar can cost you more than $A396,000.
• Being prepared and having a simple foreign exchange policy can minimise this currency risk.
  Managing your business in the current global environment can have financial impacts that can be avoided or at the very least minimised.

Risk Management Tools

You can use Risk Management Tools to manage foreign exchange risk.

Below are some of the tools you can use:

• LIMIT ORDERS: A limit order lets customers instruct us to buy or sell one currency for another currency at a target rate that is better than the current market rate. Customers leave such orders with us to take advantage of exchange rate movements that occur when they may not be able to monitor rates themselves or during overnight markets when they are asleep.
  
  OzForex provides its customers with the opportunity to leave limit orders on the overnight markets. As foreign exchange markets are open 24 hours and volatility often occurs during overnight sessions, you may miss out on the best rates if you are unable to monitor movements all the time.
• FORWARD CONTRACTS: Forward contracts allow you to lock in an exchange rate immediately without having to pay for the purchased currency until a future date. The forward exchange rate is calculated by using the current exchange rate and interest rates for the two currencies and the time or length of the contract. The forward exchange rate is a function of the current exchange rate and interest rates of the two currencies involved and is not a forecast of the future direction of the exchange rate.
  
  Forward contracts usually require a deposit. This allows you to utilise the majority of your funds until the end of the forward contract when the funds are exchanged. Forward contracts also reduce your exchange rate risk by locking in a rate now even though the actual transaction won't take place until a later date. In this way, you can be sure of the cost of your purchased currency before you actually need it.

These tips were provided by GHA business partner, Ozforex. All members of GHA get access to special deals on Ozforex services and tools.

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