Being ‘agile and lean’
When Lana Hopkins launched her online store Mon Purse in 2014, she had little idea that two years later she would have department store concessions at Myer in three states and a shop in Sydney.
But a year after launching her business, she met a New York-based retailer a little further down the road she was travelling.
When she asked what he would have done differently, he said he would have opened a shop and located his office above it.
“The information that you learn from customers on the spot is sometimes far less quantifiable online, so it’s about having the ability to be agile, to be really lean,” Ms Hopkins said.
Time to get ‘phygital’
Since then, Ms Hopkins’ business, which sells personalised leather goods like handbags and wallets, has pursued what some in the industry call a “phygital” strategy — seeking ways to get to the customer both online and off.
“What retailers are seeing is that customers are demanding and getting multi-touch points with their brand of choice,” said Paul Greenberg, one of the early players in Australia’s online shopping scene and the founder of NORA, the industry body for “new retail”.
“As a result we’re seeing online retailers increasingly moving into some kind of ‘phygital’ connection with their customers.
“That’s taking on different forms, whether it be a pop-up shop or a truck that the retailer might have, a showroom or even a partnership with an existing retailer.”
Given the lower costs involved, Mr Greenberg said opening an online shop was one of the best ways to start a retail business.
“The idea of starting a business in a physical environment is a lot more intimidating than having a go online,” he said.
“But at some stage this will have to iterate into a more convergent retail, which might not simply mean a website and a shop; I think that’s very literal.”
Australia loves the shopping centre
Online shopping makes up around 7 per cent of Australian retail sales, according to figures from the National Australia Bank.
While its growth has been rapid, for now, it is far from being our favoured way to shop, said retail analyst Brian Walker, chief executive of the Retail Doctor Group.
“Eighty-five per cent of our shopping is done in shopping centres around the country, of which we, per capita, have the highest number in the world,” Mr Walker said.
“It’s part of our social and community fabric. We are by destination great shoppers in a physical environment.”
Beyond social interaction aside, physical shops also offer the advantage of interacting with the product itself.
The main game: dollars in the till
“On average a specialty retail shop converts about one in five customers to actually buy something,” Mr Walker said.
“Online converts only 2 to 3 per cent, so while pure-play online retailers might talk about unique visits, the dollars in the till are really the topic.”
But while the dollars may flow into the till more frequently offline, the costs of having such outlets are also higher.
That lesson has been learnt by Jodie Fox, the creator of customisable footwear store Shoes of Prey, which was considered a poster child for this blend of physical and digital retailing.
Earlier this month it announced it was closing its department store concessions in Australia and the United States to return to its roots online.
Despite this setback for Shoes of Prey, Mr Greenberg says many online shops are finding they need some kind of physical presence, if their aim is to really grow their business.
It’s time online businesses get phygital and embrace the combination of in-store and online purchases with shipgooder (www.shipgooder.com) one stop shop for comparing rates, shipping and saving!