Remarkably resilient: the resurgence of physical retail shops
Even as more customers become familiar with buying online, small retailers believe a physical space is a real competitive advantage.
Like many small business managers, David Hoade from IGA Thirroul dealt with a spike in online orders when the pandemic first struck last year.
“Our online business increased sevenfold or eightfold almost immediately,” says Hoade, whose supermarket in an affluent beachside community near Wollongong specialises in natural, organic and fine foods.
The online ordering function helped IGA Thirroul maintain ties with long-standing customers and to compete with the big-brand supermarkets during lockdown. “But there’s just no money in it for us,” says Hoade. “Groceries are low-margin, and the picking and delivery fees don’t do more than cover costs.”
When the coronavirus situation stabilised, IGA Thirroul’s online orders fell away, even though the system had operated smoothly during lockdown. Those customers came back to shop in person.
Despite widespread predictions that the pandemic would trigger a permanent migration to e-commerce, just 16.3 per cent of Australia’s retail spend in 2020 was through e-commerce channels. At IGA Thirroul, physical spend has actually increased.
“People are coming in slightly less often, but they’re buying a lot more,” says Hoade. “Instead of coming in 10 times a month, they’ll come in eight times, but they’ll spend 20 per cent or 30 per cent more each time. Our turnover is actually up quite a bit on where we were.”
Why people prefer shopping in person
The increase in turnover might be because Australians began spending more money on groceries during COVID-19, and the habit has stuck. What hasn’t changed is a deep-seated preference for physical retail.
Hoade reckons the pandemic reminded us all of why we shop in person, even if we don’t strictly need to. “Our customers know our staff, and they will tell us that they love coming in for that reason,” he says.
“They also like knowing that they’re part of the community. Our store supports the community more than the big-box retailers do, and when customers visit in person they’ll ask about the clubs and schools we’re sponsoring.”
Physical retail allows customers to browse for enjoyment in a more hands-on way than they can online, and to inspect goods before they buy. “Our community likes health food,” he says. “They’re adventurous and like to be spontaneous.”
Above all, Hoade says his customers appreciate being able to grab and go. “They do a lot of entertaining at short notice, and they lead busy lives.”
As long as customers continue to value real-life browsing and a sense of community that comes from shopping in store, physical retail will remain their go-to option.
Naturally Good will be hosting a number of visitors and exhibitors from various retail groups and more at our 2022 event. We look forward to reconnecting face-to-face and doing business in a physical setting again. Find out more here.