What retail disruptors have in common

Dimitri Sotiropoulos

27th Mar 2018

Retail disruptors are finding new ways to differentiate themselves and are often more willing to sacrifice a faster growth trajectory to achieve the customer experience shoppers expect, according to new research.

In its latest survey of 100 disruptive and non-disruptive retailers worldwide, global software firm JDA said its findings debunk the myth that retail disruptors burn through profits quickly, over-invest in “hot” technology and are e-commerce pureplays.

Conversely, retail disruptors have stores, are found all over the world and invest strategically in technology. The retail disruptors surveyed called out three factors that make them disruptive: They provide the highest-quality products and services (53 per cent); they are much faster and more responsive than traditional retailers (51 per cent) and they have fundamentally changed the customer experience (42 per cent).

Of those surveyed, 66 percent of disruptors said they are profitable now, while 28 percent said they will be in the next 18 months. And 49 percent of disruptors are growing at an annualised rate higher than 11 percent, while 30 percent of non-disruptors are growing at that rate.

Speaking to Internet Retailing, Patrick Viney, JDA’s vice president of retail strategy Australia, said the impact of online mega marketplaces on traditional retail is not overblown at all.

“In most of the Asian markets, Alibaba has had a major influence on the way customers go on their shopping journey,” he said.

“Not content to just provide e-commerce platforms they have expanded to now have their own version of bricks and mortar retailing infused with the latest technologies.”

Viney said customers by default will go to a Alibaba’s Tmall site to search for a product, with  a similar experience occurring with Amazon where they are usually the default site for those looking to buy online.

“What we are seeing with these mega marketplaces is the creation of a digital ecosystem where the B2B or B2C platform is just the start,” he said.

“They provide additional services such as Amazon Prime, Amazon AWS and other subscription services. These represent additional sources of revenue for the mega marketplaces and create stickiness with their customers by offering streaming services such as music or video.

“This creates a complete view of the customer and ensure loyalty and can make it difficult for traditional retail to compete.”

In Australia, Viney said we are yet to see the same impact from the mega marketplaces, however with Amazon announcing that they will be offering Amazon Prime, we may see the retail landscape changing rapidly.

Collaboration the key

Looking ahead, Viney said without a doubt, collaboration between retailers, fulfilment providers and suppliers will be a fundamental requirement for successful retailers, particularly as e-commerce continues to mature and retailers look to optimise their fulfilment costs.

“Access to competitive logistics services for the last mile delivery assists retailers in driving down those costs,” he said.

“In Australia we can see the way Uber has expanded its service offerings to include meal deliveries. As more service providers come online it will provide retailers with a greater array of options.”

Averse to delivery fees

JDA surveyed Australian online consumers in 2017 and found that 40 per cent of consumers considered cost of delivery over speed.

“The popularity of click and collect would also suggest that Australian consumers are somewhat averse to delivery fees,” said Viney.

“Australian consumers have been buying from overseas retailers for a long period of time and I suspect they have become accustomed to longer delivery lead times from the overseas retailers and therefore this has somewhat tempered their expectations for same day deliveries.”