By James Wells
SORRENTO, ITALY: Narta MD Kay Spencer says her group is facing the biggest challenge in the last 20 years and recommends retailers adding value through service and high end products to avoid commoditisation and irrelevance.
In her address to 150 delegates on the first day of the buying group’s conference, Spencer claimed the challenges extended into all areas of the business including distribution structures and efficiencies, relationships, buying habits and technology. Commoditisation, she claimed was the biggest threat of all.
“This is the biggest challenge the industry has experienced in the last 20 years. The industry’s future is reliant on value added retailers with skills to sell new technology and high end product,” said Spencer.
“There are some prime examples of retailers that understand the opportunity is out there with some applying old wisdom with contemporary execution. Service with an online experience, refurbishing tired shopfronts, category specialists – they understand customer retention and acquisition strategies will separate them from the pack.”
Spencer also warned that distribution will need to be managed with great skill.
“Suppliers now have the ability and the desire to be selective. They have alternative avenues of distribution where they feel the brand is best exposed.”
Spencer reflected on the changing nature of the group which 10 years ago contained a large group of relatively small private or family owned businesses. It is now home to public and privately owned companies with representation in all market sectors and with different sized store layouts for metropolitan and regional areas.
Using Woolworths as a competitive case study, Spencer said with brands including Lowes, Dick Smith and Big W the group will have 30 per cent of all shopfronts by 2015.
“Volume by shopfront and ROI is the challenge. They will still compete for the customer’s dollar and supplier attention. They will also have the allure of growth. Therefore in a mature market with little technology breakthrough, it is hard to generate growth we have been privileged to do. Some think it is time to get out, while others sense there is a window of opportunity with money to be made at the start of a new lifecycle and are well down the road of starting new business models.”
Spencer reinforced that Narta’s focus will remain on the high end of the market and products attractive to early adopters retaining value in the retailing transaction as the consumer wants more control and becomes educated through various forms of media to know what it is they want and the price they have to pay to obtain it.