How bricks and mortar stores are fighting back against online shops

Friday, 28 September 2018

People are spending more in the CBD - but mostly at supermarkets and specialty food stores.

Magic mirrors, instore game consoles, meditation spaces, advance changing room bookings.

New Zealand's central city retailers have not gone to the extent of these overseas trends, but many are making changes to attract shoppers in the face of online competition.

Retail experts say creating customer experience is the new retailing mantra, not just an attractive store with well-stocked shelves.

'People need reasons to remain engaged with the brand,' says Chris Wilkinson, managing director of consultancy First Retail Group.

'Events instore help create that ongoing connection. Having something to invite customers to creates a relationship of goodwill.

'It also boosts destination value by giving people another reason to go into the shop.'

'The retailers that are doing well are creating an experience with their shopping, and really looking after their customers,' says Nick Doig.

Events such as the Ballantynes Fashion Week help create an ongoing connection with customers.

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The last six months have seen a spending growth in the central city as new shops have opened.

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This is the mindset behind initiatives such as Ballantynes Fashion Week under way in Christchurch now, boutiques holding customer evenings, stores adding cafes and play areas, and menswear stores installing barber's chairs.

New Zealanders' online buying has doubled in the past six years, jumping 13 per cent in the past year to $4.4 billion annually, according to BNZ figures. This compares with 2 per cent spending growth at traditional stores.

Brands including TopShop, Esprit, Kimberleys, David Lawrence, Dick Smith and Pumpkin Patch have closed their doors in New Zealand in recent years, blaming a challenging retailing environment.

Cashel St shoppers in Christchurch's retail precinct.

Retail New Zealand chief executive Scott Fisher has blamed a combination of flat consumer spending, industrial issues, online trends and opening hours regulations for making retailing difficult.

Retail New Zealand spokesman Greg Harford says while many retailers offer their own online sales to compete with internet stores like Amazon and ASOS, the 'bricks and mortar' experience remains a key element to selling.

'A fantastic customer experience instore will draw the customer and get them coming back,' he says.

'Once people are attracted in, they might buy something on the spot or go home and buy online. It's important for retailers to get that experience right.'

Ballantynes chief executive Maria O'Halloran says fashion week's 600 tickets sold out in record time, with more people coming to unticketed events, indicating the popularity of such events.

'There is certainly an appetite for this kind of celebration in Canterbury.'

O'Halloran says the new part of the department store due to open next year has been designed with events in mind and will have a flexible layout.

The space will hold 'small intimate groups through to large, elaborate customer events', she says, and will include a kitchen for cooking demonstrations.

National boutique chain Repertoire holds regular in-store evenings for customers, offering seasonal fashion previews, styling tips, wine, snacks and spot prizes in return for a $20 ticket. They also run free evening fashion parades as fundraisers for community groups.

Julia Benson, manager of Repertoire in central Christchurch, said the events such as a spring and summer preview earlier this month were very popular.

'It's an opportunity to get women along to have a great time, meet like-minded people and have a talk to our head designer. They absolutely love it.'

A haircut under way at Barkers Groom Room. Hallensteins also offers instore barber facilities.

Streetwear retailer Huffer, which has seven stores nationwide but none yet in Christchurch, serves free coffee to customers instore and promises 'after parties and free sh*t' to those parting with their email address to join its 'squad'.

Nick Doig, director of retail leasing at real estate firm Colliers International, says it is especially important for central Christchurch retailers to work to get customers as the city gets back on its feet.

'Foot traffic is improving in the central city, but online will continue to have an impact on bricks and mortar shops,' he says.

'The retailers that are doing well are creating an experience with their shopping, and really looking after their customers - that is going to be what helps.'

Contactless payment systems are popular with customers.

Doig says many retailers are 'reinventing themselves to combat online trend, with promotions instore and looking at new technologies'.

Innovations seen overseas include instore mirrors where customers can try outfits without having to change.

'We are yet to see that in Christchurch but there are some pretty clever innovations coming.'

Other ideas tried overseas are free instore gaming sessions and meditation spaces, onsite add-ons such as nail bars, shoe repair stations and laundrettes, and advance booking systems where customers select garments online which are sent to changing rooms for trying on at a set time.

Doig says that retailers in New Zealand, particularly the big international ones, are doing what they can to enhance the customer experience and get people in.

'Food and beverage is completely driving retail. That's what's driving the foot traffic.'

Harford says digital technologies being embraced by retailers include messages 'to alert customers about new trends or deals to drive them instore'.

While smartphone payment systems are 'still in their infancy' in New Zealand, some retailers are now taking payments through social website apps used by tourists, he says.

'Retailers here are always looking to see what is going on overseas with trends. It's really good for businesses to be thinking about these things.'

Online spending now accounts for 7.8 per cent of New Zealand's total retail sales, or 11.2 per cent not including food and liquor sales.

Among sectors affected are sales of electronics and electrical goods with a 17 per cent jump in online sales, a 10 per cent increase for clothing, footwear and accessories, and 8 per cent for furniture, housewares and hardware.

ChristchurchNZ's latest quarterly economic report reveals eating and drinking are the only areas where more money is being spent inside the four avenues than before the earthquakes. Spending in other types of stores averaged 80 per cent of pre-quake levels.

The last six months have seen a spending growth spurt as new shops have opened in the central city's new buildings, especially in both food and drink and clothing purchases.

'Because of these developments, residents are spending more in the central city further increasing spending around already established businesses,' the report says.

It adds that 'eating out or going to bars was the main reason given for visiting the central city for non-work purposes, while shopping, visiting attractions and attending events were among the other most common reasons'.