Omni-channel purchasing retailers’ way of the future

April 2014

Omni-channel purchasing retailers way of the future

Customers want to choose how and when they shop and increasingly they’re researching and shopping online, not just from computers but also from smart phones and tablets.

Giving customers multiple ways to purchase is the way ahead for New Zealand’s retailers, says the new industry association boss.

Mark Johnston started as the CEO of the New Zealand Retailers Association (NZRA) in mid-February. Part of his early focus will be helping members adopt e-commerce platforms, especially mobile ways of purchasing, which may include setting up a separate association to represent this country’s “e-tailers”.

“Customers want to choose how and when they shop and increasingly they’re researching and shopping online, not just from computers but also from smart phones and tablets.

“Right now, more than 50% of online access in New Zealand is from a mobile device and I suspect that will grow to 75% in the next couple of years. Retailers have to be ready to give customers that choice by offering omni-channel retailing,” he says.

Mark came into the job from a fundraising, marketing and communications role at Plunket, but the Scotsman has plenty of retail and sales experience. Aligned to that is his digital experience – he helped launch online betting for the TAB here, and his team vastly improved Plunket’s online and social media presence.

He was attracted to the NZRA because of the challenges facing retailers in a new, fast-changing and competitive digital environment, where overseas retailers often offer a price advantage. That’s driven mostly by economies of scale and currency fluctuations, but also by a lack of tax and duty on most private purchases.

“It’s not a level playing field. Not charging GST and duty on overseas online purchases under a certain threshold is a growing tax issue. The latest figures from the Bank of New Zealand show around 40% of all online purchases for January and February were with offshore retailers.

“That means, in terms of the tax take, Kiwis could soon spend with international retailers something in the order of $2-3 billion a year that doesn’t attract GST or duty. Potentially the Government could be missing out on at least $250-300 million per annum.

“We believe the thresholds over which purchases attract duty should be significantly reduced. Our thresholds are among the highest in the world. In the UK it’s £15, in Canada it’s $20.

“I know Customs and IRD are working on it, but interested third parties need to be brought in – perhaps the payment service companies, logistics companies, and some big omni-channel retailers and maybe some smaller e-tailers too. We need to work together to find a model that fits the New Zealand market.”

Mark is realistic that, in an election year, this issue is unlikely to be a priority. “But a big part of the NZRA’s role is advocacy, so I’ll keep having this discussion with the right people to get the right outcome.”

In the meantime, he says there are many reasons to buy online locally. “Timing is a major advantage. You buy overseas and it can take weeks, even months, to get your goods. A local supplier might have it to you overnight. Also, local brands are usually more trusted and have a better reputation for customer service.”

He says the NZRA can add value for its SME members by helping ease them into e-commerce.

“Ideally by August I’d like to host regular events to grow the capability of e-tailers, including those who have both an online and in-store presence, and those who only sell online. I’d like to offer them more support to stay current, including bringing in experts to showcase how international markets operate.
“Maybe e-tailers can fit into our current association, but maybe they will need their own. There’s a lot of demand out there. I’ll be spending the next few months talking to retailers about this and other issues.”

Away from the digital dilemma, Mark says he’d like to help retailers look more at how they provide customer service, increasing investment in staff education and training, and improving career opportunities for young people entering the sector.

“We’re a people industry and people are our biggest resource. Whether it’s online or in-store, I’m excited about the possibilities of growing our capabilities to get the best of our sector – a sector that generated almost $73 billion in sales last year.”