Big investment required.
For a small electronics retailer moving onto the online highway is not always the way to go. “Unless you are prepared to spend a lot of money it is not worthwhile,” was the view put forward by Appliances Gallery proprietor, John Hitchen.
The Canberra retailer was responding to an American Express report, Economy of Shopping Small: Keeping it in the Community, that found small businesses who fail to embrace technology risk losing out in the digital economy.
Only 38% of small businesses feel under threat from large online businesses, while 37% remain concerned about larger bricks-and-mortar rivals. The research also revealed that rising energy prices and managing costs and overheads are weighing heavily on the minds of small business owners this year.
This differs from 2016 when attracting and retaining customers was the number one concern. Also, having a basic website was said to be the most important tech investment for a small business, although only 52% of small business have some form of website. Owners cited funding, lack of time or technical expertise as the biggest barriers to implementation.
On a positive note however, more than one-third of small business owners plan to improve how they use social media while 32% are targeting increased online sales and 23% expect to incorporate more technology into daily operations.
Hitchen (pictured above), who has been in the electronics business for over 25 years, said being a small business operator in a place like Canberra, the benefits of going online were limited. “For the bigger retailers with multiple stores around the country the investment into online is a different proposition,” he told Appliance Retailer. However he said there are advantages to being small because “I can make a decision in a few minutes. The big players are more structured and any decision has to go through three or four tiers and takes more time.”
Retail is facing a lot of challenges, he said, but it’s not Amazon the worries him so much but the state of the economy and he doubts Christmas trade will be as big as predicted.
“People are paying mortgages and energy bills and many are struggling. In Canberra most of the public servants have not had a pay rise in over three years and this has had a huge impact on retail here. So unless some fresh money comes along there is not much left over in the family budget for any big spending. Many electronics retailers are in the same boat because there is not the floor traffic there was two or three years ago.”
Despite the current gloom he remains positive about next year, because as Hitchen puts it, “you never know what’s around the corner”. He has seen many big retailers come and go, but believes building a strong, long-term relationship with customers is essential to thrive in the competitive environment. “Appliance Gallery is with its customers every step of the way.”
And consumer buying patterns have changed. “In the current market customers are retrofitting, going for a single cooktop or oven. The days of selling multiple appliances with the $25,000 price tags are few and far between, when a few years ago this type of sale was par for the course.”
Appliance Gallery specialises in premium kitchen and laundry products including Miele, Falcon, Bora, Liebherr, Qasair, Siemens and Bertazonni. Hitchen said he made the decision a few years ago to stay out of the mass market area where he said there is too much competition and shrinking margins. “We cannot compete with the big retailers on prices.”