Sunday, 19 June 2016

Why We Need Precincts At QVM

Creating precincts of like products, or similar lifestyle products, in the general merchandise area of our market is a hot issue for traders. Almost two years ago a pro-grouping article was published on these pages and the reaction was clearly against the proposal. Times have changed - well actually they haven't because we are still battling a retail recession, but our customers have become even more empowered, and the search for ways to appease the wishes of our customers has caused some traders to re-think their approach.

Another article on Victraders this week talks about the importance of convenience for customers. It attempts to show that convenience is probably the single most important driver of customer responses. It has been said that opposition to precincts is a manifestation of a trader’s most selfish business survival instinct - "Give me the best chance of getting a sale by keeping my competitors well away." “I'm not interested in giving the customer convenience, I just want the sale." Spreading competitors around our market, so that essentially customers have to walk the whole market to check out all their options, is inconvenient. And the point is that if you make the shopping experience difficult or inconvenient for your customer, they will stop coming, and nobody gets the sale no matter where they are positioned.

In the supermarket game, Aldi and Lidl are on the right track. Keep the offer simple, and convenient for customers. Woolworths and Coles are battling that trend right now as they lose ground and are forced to reduce prices to maintain market share. We know from the department store war that simply reducing prices is not the answer.

And let's address the most common defence of a non-structured market - "Many of our customers like walking the whole market. It is all part of an adventure." That is true, but only for one group (admittedly the most important for the top end), our tourist visitors. As a generalisation, they are in holiday mode, and happy to browse, potter, and stroll. But what about the other shoppers, those that are time poor, and looking for convenience? They may not be the core customer for the top end of QVM but maybe that is because we don't cater to their needs. And will tourists stop coming if we create precincts? That seems highly unlikely. Tourists are going to casually browse no matter how we set up our market. They are less likely to want to "hit and run" whereas locals need that option. And let's not forget that the huge growth of apartments around our market is creating more "locals" than ever before.

We need precincts for a whole lot of reasons and one might be that it will help sort out the un-competitive traders and address the issue of repetition in many categories. Reducing repetition is good, forcing out traders is not good, and there would need to be a comprehensive readjustment program for struggling traders including a dignified exit plan if necessary.

The point of a precinct is that it creates its own energy. It becomes greater than the sum of its parts because the total picture is provided in one place. A precinct becomes a destination and each participant is forced to create a point of difference that enhances the end result for the consumer. Sameness is out, focus, depth and variety are in, and essentially that is what consumers want. It is no accident that the most successful parts of our market, the fresh food areas, are grouped in precincts

This is a complex issue. It is scary, and uncertain, but the first group of traders in the top end that agrees to establish a precinct and create a desirable destination may just reap rewards and find a way out of the retail recession. That has got to be worth a try.

By Greg Smith

Have Your Say - click here.
24/06/2016 19:43:54 Precinct "We already have precincts
Dairy Hall
Meat Hall
Fruit Stall and
General Merchandise

Leave it alone "