Retailing fighting internet
“This year, retail giants Noel Leeming and Smiths City have each reported solid profits – pulling back from a difficult five years of small margins and tough competition. But while profits are up for now, the trading environment isn’t getting any easier…
Coriolis Research director Tim Morris said while instore demonstrations have “always been around to some extent,” there was a trend toward allowing consumers to try things out in-store.
Whiteware firms faced an increasingly difficult retail environment, he said, and New Zealand had “a lot of companies competing in a relatively small space,” with little room to move on pricing.
In the long run, he said, the retailers risked becoming irrelevant – especially if big manufacturers like Sony and Apple continued the trend of cutting out middlemen and selling direct to consumers.
“The question then becomes what is the role of the retailer? Why do we need a retailer?” He said some newer entrants to the market, such as JB HiFi, had stores packed with discount products, which were winning out over some traditional big players.
“If you compare a JB HiFi with a Noel Leeming – JB HiFi has a much denser store, with a wider range of products. You’re drawn into the store for consumables . . . then while you’re there you wander round the rest of the store and impulse buy a TV.”
“I think that’s the winning model going forward – smaller, more dense, with more different categories.”
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