Retailers: embrace e-commerce or watch your business die

11 Mar 2011

Failure to embrace e-commerce or digital marketing will mean already hard-pressed Irish retailers will struggle to survive in a world where UK and US retailers are already eating their lunches.

As Google’s head of marketing for Europe Dan Cobley pointed out earlier this week, Irish consumers are buying goods online in record numbers. The only problem is they are buying goods from US and UK retailers in particular because so few Irish retailers have an online presence.

Figures revealed by the IEDR recently show that only 21pc of Irish SMEs that have websites are e-commerce enabled. This number has grown only 3pc since 2000.

Future Human

A Google and Experian Irish retail event today, attended by 100 retailers in Ireland, heard that declining consumer confidence, a multitude of purchasing options and the tough economic conditions mean Irish retailers have to work harder now, more than ever, to understand their customers and deliver targeted and relevant messaging, which in turn will generate sales and build consumer loyalty.

“Consumer confidence fell dramatically in the last four months of 2010,” explained Robert Quirke, business manager, Cheetahmail Ireland.

“In addition, shoppers are now well practiced at hunting through vast quantities of information, channels and purchasing choices for bargains and special offers. If retailers are to have any hope of survival in the current economic climate, they must seek to maximise every available opportunity at their disposal. Digital marketing is a cost-effective way of targeting new customers and promoting repeat purchases from existing customers.

“Relevancy is critical. Digital marketing will only work when the message is relevant to the receiver. Retailers need to identify exactly what data they have available in terms of their customer base and how that information can be segmented to the nth degree to allow for the development of a highly targeted, dynamic and effective campaign. Effective digital marketing campaigns recognise that one size does not fit all and deliver dynamic content focusing uniquely on imagery, offer or price, depending on where the customer sits in the sales cycle.

“Maximising digital marketing investments will increase sales and build loyalty, whilst maintaining quality, service levels and margins. One Cheetahmail customer recently experienced a conversion rate 19 times higher than its standard promotional messages with an enhanced transactional messaging campaign.”

Digital is already at the heart of Irish life – so where are the retailers?

Gary Flynn, Google’s head of online sales for retail and tech, pointed out that digital is already at the heart of Irish daily life.

Irish consumers spend almost 20 hours per week online, compared with the European average of 12 hours. They are looking for information and critically, they are looking for purchases. Almost 70pc believe search engines will help them find a relevant seller of a product that they are hoping to buy and more than 40pc intend to make more purchases online this year.”

Flynn warned retailers about the apparent disconnect between how retailers treat their offline shop window and online shop window, stating that almost 70pc of Irish SMEs don’t sell or promote their products or services online and he urged retailers to develop a digital strategy.

Flynn explained: “People expect access to what they are looking for 24/7 and on the internet, the shops are always open. For example, in 2008, 3.8m people bought online on Christmas Day, and this was a 26pc increase on the previous year! If, as a retailer, you are not selling online it then you are not in a position to maximise on these opportunities.”

With 600,000 people in Ireland owning mobile devices and 74pc of these mobile users purchasing online via their smartphones, retailers were advised to adapt their digital strategies to accommodate mobile and video technologies to bridge the gap between online and offline selling.

Flynn concluded by advising all present that understanding consumer buying behaviour is critical to maximising offline sales and that the same principle applies online. “Understanding consumer purchasing behaviour online is essential if retailers are to be ready to address future challenges.”

David Fitzsimons, chief executive officer, Retail Excellence Ireland, said the Irish retail industry is facing probably the most challenging period in its history.

“Retail sales levels have fallen consecutively for over the last 36 months, dropping to 30pc below levels four years ago. To make matters worse, retailers are also being squeezed by upwards only rent reviews, rising commercial rates and industry wage setting agreements.”

“Given the consistent growth seen in online sales levels, it is a no-brainer that all Irish retailers should have an online presence. However, given the challenges involved, the key to a successful outcome is to develop a clear understanding of how to engage with the online retailing environment,” Fitzsimons said.

Shopping online

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years