Future of Retail Stores in Australia: Effect of Online Shopping on Brick and Mortar Stores

The report discusses the challenges faced by the retail industry in Australia due to changing customer needs and expectations and the entry of international competitors. It provides recommendations such as understanding customer profiles, using technology, effective bargaining strategies, and investments to improve the chance of survival in the industry.

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E-Business Applications
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Author Note

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Introduction:
The aim of the report is to discuss the future of retail stores, in the context of how
online shopping have affected the brick and mortar stores in Australia as well as globally. It
has been supported by several authors, that with the advent of globalization and
modernization, retail stores are constantly facing challenges as international businesses enters
the market and also with the changing needs and expectations of the customers. The modern
customers tend to be more tech save, and are more aware about what they want, what the
product offers as well as about the price of the product (Pauwels and Neslin 2015; Kalyanam
et al. 2018). With online shopping, the customers now have a larger choice to choose from,
and have the facility of purchasing the products they want without actually having to visit the
shop. Other authors have also suggested that the customers have become more demanding
which also challenges the retail industry. With the retail industry of Australia, currently
making 300 billion AUD every year, a growth of 10 billion every month and employing 1.3
million Australians, it is one of the most prominent and fastest growing industries in
Australia. This report is aimed to provide information that can assist the retail industry to
adjust to the challenges and high competition in the industry (Martins et al. 2017).
Body of the Report:
Operation of the Selected Retail:
Rebel Sport is a sport and equipment related apparel chain operating from Australia
and New Zealand. They have a number of stores spread across Australia, and are one of the
most successful brands in the country. Over the years, Rebel Sport was able to meet up to the
competition in the market. In the past few months, Rebel Sports have restructured their stores
to increase the customer attraction and sell of goods (Reinartz 2016).

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Merger: One of the biggest changes that were made was a merger of the two brands of Rebel
Sports under a single and sleek branding. The change was made within a span of 6 months,
where all the physical stores changed their branding and setup (Peres et al. 2017).
Arrangement of Merchandise: The merchandise are not arranged according to their types as
seen in most retail companies (for example a segment entirely made for shoes, or clothing).
Instead the Rebel Sports stores arrange the products or merchandise according to the
consumer profile. For example a section of the store marked as ‘Runners’ would have all the
products that can be associated with running (including shoes, sportswear and accessories).
This arrangement forms a small ecosystem of products, and provides the customer to select
everything he/she needs from a single segment of the store. This also helps in the better
engagement of the customers in the store and opens a scope for a dialogue with them. The
store also uses data from the movement of customers across the stores to identify the parts of
the store most frequently visited by the customers (hotspots) and the parts of the store not
visited much (cold spots). Using this information, the stores dynamically rearranges the parts
not visited much in a way to attract more customers (Christiaans 2016).
Omni Channel: Rebel Sports have incorporated a strategy for even better engagement with
the consumers, providing them wider opportunities for placing orders with them. The stores
not only provide the option for the customers to visit, and choose from the available products
for a traditional shopping experience. Additionally, the consumers can also order products
online, which can be delivered to their homes, or they can pick up from the store itself. The
online ordering can help the consumers to save their time browsing through the aisles in the
store, and directly get the products they want. The online shopping site for Rebel Stores also
is arranged like their retail stores, where the products are arranged according to the customer
profiles (Notomi et al. 2015).

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Supply Chain: The supply chain of the rebel stores is extensive, spanning across the country
and employing more than 6000 employees. They have an extensive network of supply chain,
procuring raw materials from various companies and producing their products. The store uses
agile marketing strategy to ensure fast delivery and movement of the products across the
supply chain system. Advanced technologies such as tagging system, GPS system and IR-
Scanning system helps in the effective maintenance of the inventory, which is synchronized
across all the stores and with the online shopping portal. This helps the customers to access
and view all the available products (Pauwels et al. 2015).
Delivery: Delivery of the products is made to their doorsteps. The customers also have the
provision of ordering the products and then picking up those products from the stores. The
delivery system is much optimized, with the customers able to get live updates and track the
movement of the good leading up to their home. Additionally, the delivery time is also very
streamlined to ensure timely delivery using the most efficient means for delivery (Zhang et
al. 2016).
Competition: The Rebel Sports also plans to increase its investment in the next 5 years to
ensure its sustenance against the competitors. The organization has used the policy of trying
to understand their customers better and having a clear understanding of what they want.
Additionally, the organization also has a significant presence in the Australian market
through tie ups with different sporting bodies and community programs, which allows them
to be present in various community sports activates and maintain a good image of the
organization in the market. Also, regular training of the employees and effective leadership
helps in the maintenance of good customer service and thus support customer retention.
Through such aspects, the organization expects to be ahead of their competition (Çifci et al.
2014).

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Five Articles Relevant to the assignment “Future of the retail store- Effect of online
shopping on brick and mortar stores
Through research of academic journal article, it was possible to develop an
understanding of the future direction of the retail stores with the advent of online shopping
and a changing consumer market. Discussed are some of the aspects
Peres, I.T., Repolho, H.M., Martinelli, R. and Monteiro, N.J., 2017. Optimization in
inventory-routing problem with planned transshipment: A case study in the retail
industry. International Journal of Production Economics, 193, pp.748-756.
The studied article titled “Optimization in inventory-routing problem with planned
transshipment: A case study in the retail industry” focuses on the future of the retail industry
and how companies can cope up with the emergent challenges faced by the sector. The
authors, Igor Peresa, Hugo Repolhoab, Rafael Martinellia and Nathália Monteiro in the
journal ‘International Journal of Production Economics” discusses about the strategies for
optimizing the process of inventory routing challenge using the process of planned
transshipment. In this process, the same vehicles are used for the transportation of the
merchandise across the stores and for the distribution of products from their factories, thereby
making the process more agile.
Notomi, N., Tsukamoto, M., Kimura, M. and Yamamoto, S., 2015. ICT and the future
of the retail industry-Consumer-centric retailing. NEC Tech. J, 10(1), pp.38-41.
The article “ICT and the Future of the Retail Industry - Consumer-Centric Retailing”
focuses on how customer centricity can be maintained by the retail industry in order to
overcome their competition. The authors Narumitsu, Michiko, Masaaki and Shota in the
journal NEC Tech discusses the changes that are currently taking place in the retail

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environment, including a digital change, change in services, and changing demands. The
authors suggest that the retailers needs to shift the focus on a consumer centric approach in
order to ensure better customer retention and growth and sustenance of the business.
Moatti, V., Ren, C.R., Anand, J. and Dussauge, P., 2015. Disentangling the performance
effects of efficiency and bargaining power in horizontal growth strategies: An empirical
investigation in the global retail industry. Strategic Management Journal, 36(5), pp.745-
757.
This article titled “Disentangling the performance effects of efficiency and bargaining
power in horizontal growth strategies: An empirical investigation in the global retail
industry” published in the journal ‘Strategic Management Journal’, focuses on the bargaining
power of the customers in a retail business. According to the authors, that by understanding
the bargaining power of the customers and using it in the marketing of the products can help
in the horizontal growth of the business and thus help in its survival against the competition.
The authors also suggests that the strategy is important since the customers are more price
conscious and product conscious due to which a bargaining strategy is vital.
Zolnowski, A., Weiß, C. and Bohmann, T., 2014, January. Representing Service
Business Models with the Service Business Model Canvas--The Case of a Mobile
Payment Service in the Retail Industry. In system sciences (HICSS), 2014 47th Hawaii
International Conference on (pp. 718-727). IEEE.
The article “Representing Service Business Models with the Service Business Model
Canvas -- The Case of a Mobile Payment Service in the Retail Industry” focuses on the
importance of mobile payment services in the retail industry. The authors, Zolnowski, Weiß
and Bohmann, in the journal System Sciences (HICSS) argues that mobile payments can help

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the customers to pay more easily to purchase products which can help the retail industry to
streamline their billing process and develop the business through the support of e Commerce.
Priporas, C.V., Stylos, N. and Fotiadis, A.K., 2017. Generation Z consumers'
expectations of interactions in smart retailing: A future agenda. Computers in Human
Behavior, 77, pp.374-381.
The article titled “Generation Z consumers' expectations of interactions in smart
retailing: A future agenda” focuses on the Generation Z customers, or the ‘millenials’ and
their changing needs and demands on the future of the retail industry. The authors, Priporas,
Stylos and Fotiadis in the journal Computers in Human Behavior have elaborated on how
technology have changed the consumer behavior, especially among the newer generation,
which they have termed as the ‘Generation Z’. These consumers are more tech savvy and
spend a longer time on the internet. Also, their expectations are also well informed through
the access to a wider range of information over the internet. Therefore, it is vital that the retail
industry understand the expectations of these consumers in order to attract them to the stores
or to their products.
Conclusion and Recommendation:
With an overview of the key research article and discussion of the various challenges and
opportunities associated with the advent of online shopping, changing consumer market and
international competitors in the retail industry in Australia, it could be summarized that the
most significant challenge faced by the industry is from a changing expectations and needs of
the consumers and the entry of international companies. Even through the retail industry in
Australia is one of the biggest employers with fastest growth rate, staying abreast of the
competition is a serious challenge; the retailers in Australia must cope with. From the
discussion several key recommendations can be outlined which when successfully

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implemented can improve the chance of the retail business to survive in the quickly changing
and dynamic industry. These recommendations include:
 Understanding the customer profiles and their expectations in order to address them
better
 Using technologies such a mobile payment to support easier transactions
 Using effective bargaining strategies for the pricing of the product and understanding
the bargaining power of the customers.
 Using internet communication technology and a customer centric approach
 Using Trans shipment for more efficient delivery of materials and products.
 Using effective data analysis strategies to understand the hotspots and cold spots in
the store
 Arranging the products according to the consumer profiles
 Improving investments.

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References:
Christiaans, H., 2016. The 12 future of retail and retail design. Retail Design: Theoretical
Perspectives, p.212.
Çifci, S., Ekinci, Y. and Whyatt, G., 2014, July. A cross validation of consumer-based
brand equity (CBBE) scales in fashion retail industry. In 2014 Global Marketing
Conference at Singapore (pp. 1459-1468).
Kalyanam, K., McAteer, J., Marek, J., Hodges, J. and Lin, L., 2018. Cross channel effects
of search engine advertising on brick & mortar retail sales: Meta analysis of large scale
field experiments on Google. com. Quantitative Marketing and Economics, 16(1), pp.1-
42.
Martins, S., Amorim, P. and Almada-Lobo, B., 2017. Delivery mode planning for
distribution to brick-and-mortar retail stores: discussion and literature review. Flexible
Services and Manufacturing Journal, pp.1-28.
Moatti, V., Ren, C.R., Anand, J. and Dussauge, P., 2015. Disentangling the performance
effects of efficiency and bargaining power in horizontal growth strategies: An empirical
investigation in the global retail industry. Strategic Management Journal, 36(5), pp.745-
757.
Notomi, N., Tsukamoto, M., Kimura, M. and Yamamoto, S., 2015. ICT and the future of
the retail industry-Consumer-centric retailing. NEC Tech. J, 10(1), pp.38-41.
Pauwels, K. and Neslin, S.A., 2015. Building with bricks and mortar: The revenue impact
of opening physical stores in a multichannel environment. Journal of Retailing, 91(2),
pp.182-197.

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Peres, I.T., Repolho, H.M., Martinelli, R. and Monteiro, N.J., 2017. Optimization in
inventory-routing problem with planned transshipment: A case study in the retail
industry. International Journal of Production Economics, 193, pp.748-756.
Priporas, C.V., Stylos, N. and Fotiadis, A.K., 2017. Generation Z consumers' expectations
of interactions in smart retailing: A future agenda. Computers in Human Behavior, 77,
pp.374-381.
Reinartz, W., 2016. In the Future of Retail, We’re Never Not Shopping. Harvard
Business Review Google Scholar.
Zhang, J., Mineyama, K. And Tanaka, K., 2016. A New Supply Service Model for Retail
Delivery Businesses. DEStech Transactions on Engineering and Technology Research,
(amita).
Zolnowski, A., Weiß, C. and Bohmann, T., 2014, January. Representing Service Business
Models with the Service Business Model Canvas--The Case of a Mobile Payment Service
in the Retail Industry. In system sciences (HICSS), 2014 47th Hawaii International
Conference on (pp. 718-727). IEEE.

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