Articles

Without A Change Of Clothes, You’ll Always Look The Same.

While shopper’s willingness to spend is only limited by what they perceive they have to spend, dollars spent at retail continue to grow in Australia to all time highs. Interest rate increases are beginning to affect the cumulative debt levels they can continue to service, but shoppers are still out there spending nonetheless and still in increasing dollar amounts.

However there are some sectors of retail that are underperforming others with no or negative growth in a market that is growing overall. And in some of those sectors we continue to hear the equivalent of ‘the dog ate my homework’ in lame excuses – as to why they are underperforming – repeated over and over again. The theory of osmosis was proved in ‘industry-think’ many years ago, betraying the notion that the vast majority of players in an industry think the same and act the same creating a self-perpetuating paradigm.

The apparel industry is a case in point. Self-deflating unit prices and shrinking average basket dollars through discounting almost solely sustainable based on currency gain. Commoditising product through mirroring trend, product development and sourcing and maniacally focussing on cost control, in an era when shoppers have been clearly displaying all the symptoms of the contagion of the millennia – shopper fatigue.

“It’s so tough out there. We keep doing more and more of the same old stuff and the results are getting worse.”

It is time to stop managing the expectations of the capital markets with rhetoric and time to change the paradigm with action. It is time to re-discover how to realign to shoppers rather than to the industry-think that prevails. Without a change of clothes, you’ll always look the same.

Shoppers want newness they can recognise and be excited by, yet a brand that has some consistency to it that they can rely on. They want real choice not a sea of product that varies by a fraction of a percent. They are increasingly looking for value rather than cheap price. They seek uniqueness and a point of view rather than adaptation. And they want what they want when they want it. Try buying summer clothes in Australia in February – the hottest month of the year. Or winter clothes in July – the coldest month of the year.

Christmas 2009 was +3% up on Christmas 2008 – despite the longest and deepest discounting in the lead-up to December 25th that many people can remember. Not only did we keep the so-called stimulus gains of the year before, we built on them. Despite apparel retailers desires to give away margin. The inescapable truth is that customers buying the same number of items every year at increasingly lower prices has to lead to lower sales, lower margins and lower profits. The magic volume gain is as invisible as the emperor’s new clothes.

Time to change your clothes. Time to excite shoppers to want to spend more on more exciting, better value propositions. The apparel model was never based on socialist principles of bringing everything down to cheap, functional shades of grey. It has always been – like capitalism – about dreams and colour and reward.