How the 'Transformation Economy' will reshape Australian retail

Written on the 23 August 2019 by Business News Australia

How the 'Transformation Economy' will reshape Australian retail

For the world of retail this decade has been all about the dichotomy of online versus physical; clicks versus bricks.

It is a distinction that has confounded the dinosaurs of traditional Australian retail, leading to the demise of many purely physical retailers, and egging on the rise of online warehouse type platforms like Amazon or Australia's Kogan.com.

But according to futurist Anders Sörman-Nilsson (pictured) the dichotomy is no longer that simple.

According to new research by Sörman-Nilsson's think tank Thinque Australians actually prefer shopping in physical stores over their online counterparts, with 73 per cent preferring to get out and about for some retail therapy.

Breaking it down further, Thinque says 87 per cent of 57+ year olds agreed that they preferred physical to online stores, compared to a 61 per cent of 18-25 year olds.

These numbers are surprising indeed, considering the demise of major Australian retailers and the unbridled success of new players in the retail economy like The Iconic, Kogan, and agile new players led by young entrepreneurs that are savvy enough to launch successful online spaces.

Looking closer at Thinque's research, 83 per cent of Australians surveyed say that they liked to be able to see and touch items, 31 per cent say they enjoy the shopping experience, 25 per cent say that shopping in-store reduces the need for returns, and 19 per cent say they like having a salesperson help them.

Sörman-Nilsson says retailers need to rethink what customers want and ditch the old thinking about the dichotomy of physical versus online.

"Our research clearly shows that Australians theoretically prefer physical stores, yet despite this they are still moving to using online stores more," says Sörman-Nilsson.

"It is time for retailers to understand they are now no longer just in an Experience Economy, but in an emerging Transformation Economy - this drives the need for brands to transform their utility in the digital minds and analogue hearts of consumers, while also transforming both the digital and analogue brand touchpoints to help consumers on their paths to personal transformation."

"The idea behind the Transformation Economy sees brands like Lululemon, Raiz, and Nike acknowledge that consumers are looking to connect with brands on a deeper level, allowing them to undergo an actual transformation, rather than simply purchasing more stuff. One early example of this was Nike which released the Nike+ app offering users access to training and running classes, the ability to track and monitor personal progress, as well as set goals based on ability, all within the app. By offering data in return, consumers are enabled to use the app to help make keeping fit a richer personal experience and make self-actualisation through transformation an achievable target. For example, Nike as my transformation partner helped me kick a bucket list item and run the New York Marathon."

Sörman-Nilsson shares the three key changes consumers can expect to see from brands in the Transformation Economy:

1. Product offerings will invoke a sense of self-improvement:

Within the Transformation Economy, it will no longer be enough for brands to provide products to meet consumer demands.

More and more, consumers are favouring experiences over possessions and in the Transformation Economy that notion is taken one step further.

Consumers will now be looking to brands to offer experiences that are in some way transformative, for example resulting in physical, mental or emotional improvement.

One great example of this is LuluLemon, who opened pop up shops that offer yoga for consumers alongside their product offerings, showcasing the ways brands must focus on creating memorable (and transformative) events for their customers, with the transformational experience itself becoming the product.

2. Brands will provide bespoke offerings:

The Transformation Approach, by definition, cannot be a 'one-size-fits-all' approach.

In order to succeed, brands will need to curate personal experiences and adapt to the needs of individuals to ensure active and engaged consumers as they embark on their journeys of personal transformation.

To do so, brands must develop an innate and genuine understanding so that consumers can feel they are truly buying into brands that connect with them on a transformational level, eg. like Raiz (previously Acorns) is connecting with Millenials' future financial ambitions.

3. Brands will be required to form a deeper psychological connection with consumers:

The Transformation Economy will see brands guide consumers beyond just experiences, instead allowing them to benefit from a deeper connection with the brand.

Interactions will become highly personalised, allowing brands to stand out from a highly saturated crowd. Consumers will now be looking for more than just 'experiences', instead wanting to benefit from a soulful relationship with the brand a connection that results in a dialogue and co-creation.

Naked Wines has done just this; by allowing customers to choose between buying wine on a one-off basis or becoming (investor) 'Angels' who venture-fund the product and benefit from discounts, in turn, fostering loyalty amongst consumers by making them feel as though they matter by helping to support independent winemakers over larger retailers.

Allowing consumers to feel as though they are also doing 'transformative good' will be crucial in nurturing consumer relationships in this emergent economy.

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Business News Australia

 
Author: Business News Australia

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