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Bernie Brooks, the CEO of Myer, has estimated that they online sales currently are worth around 5 million dollars with around 2500 SKUs. On the ABC’s Business Insiders Brooks has said that online sales for the retailer are tripling “each year”, and if things change online then they will be in a good position to take advantage. Currently, it is estimated, that online sales make up around 2-3% of retail sales in Australia, which Brooks expects would only increase to about 10%. Overall Myer’s profit is down 3.5%, and as with a lot of other retailers, they are claiming to struggle against not only online sales, but also consumers having a range of concerns including interest rates and the carbon tax.

Old fashioned retailers, like Harvey Norman, struggle with online retailers, not just because they can’t or wont compete on price, but also because they can’t compete with the breadth of offering and the speed of delivery. In the interview with ABC, Brooks suggested he had a few ideas with how they are going to compete, but there is more they should do.

There are a few key things that offline retailers have that online retailers can never compete with;

  1. Relationships – face to face allows you to build strong relationships
  2. Community – offline you can build relationships faster and in more directions
  3. Store space – Touchable, always present, store frontage and product availability.
  4. A thousand ways to contact someone – a large portion of online retailers have no way of calling someone
  5. Exclusive Product – Amazon.com has shown that consumers will buy product combinations when presented with them. Most online retailers also struggle having a range of odd sizes.
  6. Returns Policy – Without a physical presence it is hard for online retailers to have a returns policy that people are comfortable with. Even blanket returns policies, where they accept everything, still mean that the product has to do two more legs before the customer gets a replacement.
  7. Knowledge – Some online retailers try to have online sales reps or an extensive FAQ. However you only need to look at the Mac stores to see what a difference knowledgeable sales staff can make. This is certainly an area that Harvey Norman could improve on.
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