Grant Arnott from Power Retail – Podcast Transcript

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Shaun Ryan:  Hi, I’m Shaun Ryan from SLI systems and this is the ecommerce podcast. Today I’m talking to Grant Arnott, editor and publisher of “Power Retail” in Australia. Welcome, Grant.

Grant Arnott:  Thanks, Shaun.

Shaun:  Traditional question to get us going. What was the first thing you ever bought online?

Grant:  Well, first thing I ever bought would have been an airline ticket a long time ago, I’d say up to 10 years ago when that was really the precursor to a lot of the online retailing we see today. In terms of an item that got delivered, the earliest one I can remember was printer cartridges. So I’m a relative newcomer, I suppose, to the online shopping experience versus many others that you probably speak to. That was probably only about four years ago but I’ve certainly changed my tune since then.

Shaun:  Yes, I think by the sounds of it you have immersed yourself in it.

Grant:  Most definitely.

Shaun:  How about the most recent thing? What was the last thing you bought online?

Grant:  Most recent thing was a $20 pair of Havaiana thongs from SurfStitch.

Shaun:  For those of you that aren’t Australian, thongs are a type of footwear, right?

Grant:  That’s right.

Shaun:  Not underwear.

Grant:  Flip flops, sandals. Yes, we call them thongs. They don’t go under my shorts, they go below the ankles.

Shaun:  Pleased to hear it. Grant, can you give me a little background on yourself please?

Grant:  I’m a business media veteran. I’ve been involved in business media for 12 years now and was formerly editor of “Marketing Magazine” and magazines like “Franchising Magazine” and delivered a lot of business content for a variety of publications and media outlets. But, really over the last three years I’ve become very immersed in ecommerce and so we publish “Power Retail,” which is Australia’s news and information resource for online and multichannel retailers. With the boom in this market, we feel like we’re onto a good thing.

Shaun:  Great. Whereabouts in Australia are you based?

Grant:  We’re based in Melbourne.

Shaun:  In Melbourne. Yup. Tell me a little bit more about “Power Retail.” How many subscribers have you got?

Grant:  We’ve got just over 8,000 subscribers to our newsletter and we get about 25,000 to 30,000 unique visitors a month, so it runs the full gambit of online retail practitioners from the enterprise level multichannel retailers down to eBay sellers or just a bit of both, the guys that are starting their dream online retail vision out of the lounge room. What’s been fantastic is just seeing the growth of some of the smaller retailers over the last two or three years, just watching some of those guys like Australian companies like SurfStitch and Bird’s Nest and others that are coming through and continuing to improve and really shake things up. It’s an exciting time.

Shaun:  The geographic market is Australia primarily, correct?

Grant:  That’s right. We’re focused on Australian business but we notice we get a lot of traffic from New Zealand. We get a lot of traffic from Europe and the US as well. It’s gaining the profile. We think we’ve got a thought that’s as good as any in the world in terms of the resources that it offers but it is focused primarily on Australian stories.

Shaun:  Cool. Tell us just a little bit more about the Australian ecommerce market. How has that been growing over recent years?

Grant:  It’s growing fast. Particularly in the last 12 months, I think, 2011 most definitely was a watershed year for ecommerce growth in Australia and that was due to a number of factors. I think the traditional retailers had a big concern, and still do have a big concern, around online international retailers taking market share away from them by targeting Australian customers. That’s come about because of the rise in the Australian dollar against currencies like the US has made buying goods from the UK and the US and Asia a lot cheaper for Australian customers. The customer experience has improved a lot internationally but not so much at home.

We had this dynamic over the last 12 months where Australian customers were awakened to the potential of international shopping, not only for the bargains that could be had but also for the range and for the customer experience they could get from buying from an overseas retailer from say a Ned Porter or a Macy’s or a Strawberry Net and found it was superior to the local offerings.

What that drove is a lot of alarm bells ringing in the local industries and a lot of major retailers scrambling to get their ecommerce offerings in order to be able to compete. The first thing they did was try to seek some protection from the government, trying to seek a lowering of the GSP threshold on imports to make it harder for people to buy goods cheaply overseas, but that blew up in their faces.

What was obvious was that Australian customers think that a lot of the traditional retailers have been ripping them off, see the cheaper prices overseas, want to be able to buy online, are increasingly preferring online as their shopping channel. It backfired, and the traditional retailers now recognize, absolutely, that it’s not a case of if, but when, and that they’ve got to get their ecommerce offerings in order.

And so there’s been a mad rush on both the multi‑channel front as well as the pure‑play retail front to improve ecommerce offerings. What we’re seeing, I guess, what’s exciting is this program of continuous improvement, that you just see the top pure‑play retailers, like I would put SurfStitch up there‑‑they won best Pure‑Play Retailer of the Year in 2011‑‑and others, such as Skills Direct and Catch of the Day and Birdsnest, a raft of pure‑play retailers, really pushing ahead to continue to improve their offerings, to maintain that window of opportunity that they’ve got as long as they can before some of the bigger multi‑channel retailers.

We saw Harvey Norman go live with their site in November, and others, like Meyer and David Jones are committing bigger resources to this space now, too.

Shaun:  All right. I imagine it’s quite a different situation than in the US, because Australian retailers, both pure‑play and traditional retailers, are getting online at a much later stage. The websites they’re coming up with have to be quite different than what they would have come up with five years ago, because the best practices in online retail have changed, around what the stores should be like, how you search and navigate within it, the reviews, the integration with social media. They’re really coming in being able to leverage all the learning that has happened in earlier markets, like America.

Grant:  Absolutely. Look, what we’re seeing and what we service with Power Retail is not only providing news around what’s happening around the industry but providing that resource. I’m also very heavily involved in the Online Retailer Conference. Power Retail and Online Retail have worked very closely together, with a mission to educating and stimulating the market in Australia. So we do that by exposing the local market to best practices that they need to understand. I think a couple of years ago, it would be fair to say that if you had a decent ecommerce platform in Australia, you had a competitive advantage. But I think we’re now moving to a point where a decent ecommerce platform is a ticket to the game, and the competitive advantage comes from the things that you are mentioning: the better merchandising, the better ecommerce strategy, the better site optimization, the better navigation, the improved marketing, the improved social commerce integration.

Mobile as well is now increasing in importance. Yeah, retailers have moved from, “OK, we need to actually set up an online store,” to, “OK, we’ve got the store running. Now we need to optimize it,” and we’re there to provide that continuous stream of information and insights into best practices and who’s doing it well.

Shaun:  Tell me a little bit about the online‑retail show that you’re involved with. What’s your involvement, and what would someone expect to get out of it if they attended that? There’s a few different events that Online Retail hold, I believe, right?

Grant:  That’s right. The conference is, again, pretty young. It began in 2009, and it was, believe it or not, the first dedicated online‑retail event in Australia, which is kind of hard to imagine. Particularly now, as we see, I guess, the business focus on online retail and ecommerce these days, it’s hard to imagine that the first dedicated conference only occurred in 2009. What we have in addition to the main conference, which includes multiple learning streams, includes international keynotes, includes a fantastic expo where you get to preview and browse and demo and sample the latest technology and solutions for improving your online‑retail offerings, we also offer workshops, we offer a dedicated Mobile and Social Commerce Summit. In 2012, we’re looking at adding things like a dedicated fulfillment day. What we try and do is work with our audience and work out what are the key pain points and address those by providing the best thought leaders in the world to provide education.

In 2011, we also introduced the roadshow. Once a year, we felt, was great, but not quite enough to continue serving the market. In March this year‑‑and we run it for the first time in June 2011‑‑we’re holding a roadshow, where we do a one‑day, single‑streamed conference in Sydney, Melbourne, and Brisbane, so Australia’s three major cities.

Again, that’s more of an intensive focus on this issue seen as leapfrogging, and it’s something that you alluded to earlier, where Australian retailers have been slow to catch on to the ecommerce train but need to get to the front of that train pretty quickly. Our focus this year is on leapfrogging by using technology, using smart solutions, using smart strategies and tactics to ward off that international competition, which I think is everyone’s big fear here.

Shaun:  Yes. Yes. I remember hearing from an American retailer during, I think it was either the roadshow or the conference‑‑I think it was the roadshow last year‑‑from Sheplers.

Grant:  Sheplers, yes. Bob Myers.

Shaun:  Bob Myers, said that they sell something like 17 percent, I think, was it, of their revenue is in Australia?

Grant:  That’s right. Sheplers Western Wear, believe it or not, the biggest western‑wear retailer in the US, does 17 percent of their revenue in the Australian market. Specifically, the bulk of that comes from the Sydney metropolitan area, so it’s not even outback Australia. There’s a lot of urban cowboys over here.

Shaun:  [laughs]

Grant:  I think the point you’re making is that, yeah, Australian retailers, by lagging, are losing significant market share to their overseas competitors, who are set up. I spend a lot of time, as you’re aware, in the US, attending conferences. What we’re seeing is that as their ecommerce market matures, they’re looking for the next opportunity, and that lies outside the border. They’re targeting countries with relatively weak ecommerce offerings, like Australia and New Zealand and some other South American and Asian countries, to go into. But look, again, I talk highly of SurfStitch. We’re also able to do that as well.

Shaun:  It goes both ways.

Grant:  Yeah. The directors of SurfStitch are opening up an outlet in France very soon, putting together a distribution center in France to serve that market, because what they’ve got is a best‑in‑class offering locally, and it’s in surfwear. They see that they’ve got an opportunity now to take that international. It can work both ways, and that’s a very exciting opportunity for online retailers in Australia. They just need the vision.

Shaun:  Interesting. Yes, I know, from many of the US retailers, and actually other retailers I talk to outside of the US, one of their big growth opportunities is international. It’s definitely something that they’re all focusing on, seeing that there’s an opportunity for them to grow their business. But it’s interesting to see that it’s going the other way as well. Now, you did mention that you go to the US a lot. I completely confirm that; I think I see you in the US more than I see you in Australia.

Grant:  [laughs] Sure.

Shaun:  Just before we got started, you mentioned you were at the National Retail Federation Conference in New York a couple of weeks ago. Can you tell us a little bit about that show and what you learned?

Grant:  Look, it’s a massive show, and ecommerce formed a pretty significant component. It is, as far as I know, the largest retail conference on Earth: 24,000 people attending through the four days. What I really noticed, in stark contrast to the Australian market, was that there’s a lot of buoyancy and a lot of optimism in retail in the US. They’ve seen 18 consecutive months of growth in the retail sector, and they’re campaigning pretty hard. They recognize that they have a very strong voice, and they do have a strong voice in the US. They’re campaigning pretty hard to make sure that the retail industry is looked after, and they’re certainly pointing to the fact that 18 consecutive months of growth against the odds in that quite depressed market at the moment is a great thing, and it is.

In terms of some of the learnings, I think what we’re seeing, with not only ecommerce technology but mobile and in‑store technology, is really exciting for retailers and really exciting for customers. I think that customers are going to see a technology‑drive explosion in how good the customer experience becomes over the next few years.

What the traditional retailers are realizing is that their business model is changing. Everyone was talking transformation. Everyone was talking reinvention. There’s no one that’s clinging to the traditional model of, “No, this is the way of the future,” or “This will stand the test of time and prevail over all this ecommerce stuff.” They’re fully cognizant now of the need to move to an omni‑channel‑focused business, which means that they’ve got to have a seamless customer experience across mobile, across online, across their traditional stores. That’s increasingly the customer expectation. They’re making some significant moves in that regard, and just changing the way they think about their business. It’s not a simple P&L that they work off anymore, a profit‑and‑loss.

Shaun:  That’s interesting.

Grant:  Yeah, looking at other metrics around customer experience and engagement and value across all channels that they’re seeing as the key drivers of how they do business going forward. Some of the technology they’re investing in are things like in‑store kiosks that offer an endless aisle, if you like, of products. I saw that firsthand, visiting J.C. Penney, that you can use an in‑store kiosk at various points in the store. If you can’t find what you’re looking for, or even if you want to find it quickly, which it’s just like going to the site‑search box on a website, where if you want to find something quickly, you can walk straight to this kiosk, without trying to flick through the racks, and quickly and digitally find what you’re looking for. It’ll tell you whether it’s in‑store, and if it’s not, you have the option to have it delivered to your house within a day or two.

There’s a lot of disruption occurring in the retail environment. But overall, I felt that the major retailers are a lot more confident now than what they were a couple of years ago of being able to embrace omni‑channel. But they are talking reinvention. There was a lot of discussion around reducing the store footprint. I don’t think that the traditional landlords are going to be too happy about the future, because there isn’t the incentive now to open stores, but there is the incentive to invest more heavily in ecommerce and open distribution centers and focus energies around that.

Shaun:  Very good. There’s obviously a lot of information you take away from one of those shows, and a lot of that then flows out through the “Power Retail” site and newsletter and then is brought into the Online Retailer show in Australia.

Grant:  That’s right. We always go to see what the rest of the world is thinking about online retail. I guess the other big thing I noticed, too, and I’m trying to get the final numbers, was only a fraction of representatives from Australia were in attendance at this event. Considering that in our local market, traditional retailers are crying poor and saying, “We’re down. Our numbers are down, and we’re encountering retail headwinds, the likes of which we’ve never seen, and this is the perfect storm,” and this and that, when a country’s announcing that they’ve had 18 consecutive months of growth in the retail sector, against the odds, or against the trends, you’ve got to take notice. You’ve got to get to these events and take a look at what’s going on in world’s best practice and bring it back and apply it, because they’re not short‑term trends. There is a definite changing of the guard. The traditional retail model is no longer applicable in the omni‑channel world that we’re entering. The smart retailers are recognizing that, and those who don’t or fail to act too quickly are going to suffer.

There’s some big names on the chopping block, and I think Wal‑Mart would have to be one of those, where their big‑box model and their relatively sluggish uptake of the online channel is going to cost them in the long run, against the likes of Amazon and eBay, who continue to eat their lunch.

Shaun:  Yeah. Definitely some exciting times. Interesting times, as they say.

Grant:  It is. It’s a very dynamic space, and it is very exciting times. When I go back to my history of being a business‑media veteran, I think I’ve never encountered a market so dynamic. Working across marketing and working across franchising and other areas that were very well‑established and set in their ways, and there wasn’t a whole lot of upheaval, this is something completely different. There’s just a continuous surge in technology. I think it’s the users that drive the radical transformation, because they see something new and they grab it. The speed at which things can become ubiquitous, via the Internet or via mobile, is amazing. We just wrote a story about a social‑media site called Pinterest, which has been around for a little while but has really exploded in the last three months, it seems, and everyone’s talking about it. It’s a content‑curation site which allows users to bookmark things that they like on the Internet and set up their own little curation domain, if you like. The speed at which that’s suddenly become a key driver of traffic is unprecedented. Suddenly, it’s surpassing Google Plus, I read just yesterday, as a traffic driver for retail sites.

It’s impossible to predict all of these things. Retailers really just need to be agile and act quickly. I find that really exciting, because we feel like we’re seeing it all unfold.

Shaun:  Yes. Pinterest is definitely getting a lot of press at the moment. A lot of retailers are seeing great traffic that’s converting. Grant, on that note, we will probably wrap it up. But I think, just to wrap it up, can you let us know the URL of the “Power Retail” site, so if anyone wants to find out more, to subscribe to your newsletter, they know where to go?

Grant:  Yeah. It’s powerretail.net.

Shaun:  Powerretail.net.

Grant:  That’s it.

Shaun:  Excellent. We’ll include a link to that in the show notes for this podcast. Grant, I want to thank you very much for the very informative interview you’ve just given. There’s a whole lot of information there, and the Australian retailers really have a lot of work to do, but huge opportunities as well.

Grant:  Definitely. It’s exciting. It’s all upside. There’s no one I know that’s failing online. There are great opportunities and great service providers as well. We’re looking forward to seeing what happens in 2012.

Shaun:  Excellent. Thank you very much, Grant. I appreciate your time.

Grant:  Thanks.

Shaun:  That was the Ecommerce Podcast. I’m Shaun Ryan from SLI Systems. Tune in next time.