The State of the Shoe Sector

russellzimmermanphotoeditMost people will recognise Russell Zimmerman as the face of the Australian Retailers Association, but perhaps what you didn’t know about him was his personal history in the retail sector. Since 1980, Russell Zimmerman has owned and operated the Spark’s Shoes retail chain with his wife Marion. Spark’s Shoes is a 75-year-old family business specialising in the fitting of children’s footwear.

So of course Shoe Fair Online saw it fitting to ask the ARA Executive Director specific questions regarding the footwear sector, its current state, his own tips and tricks for seeing out this tough economic climate, and the importance of multi-channel retailing.

As the Australian economy continues to recover from the downturn in 2008/09, industry growth is also predicted to remain steady. What is your opinion of the current state of the shoe sector? How do you think it will fair over the next five years? 

As part of the clothing and footwear industry category, the shoe industry is feeling the effects of poor sales due to low consumer sentiment, a poor winter sales period and soaring household budgets causing consumers to hold back on discretionary spending. Having said this, there is a trend towards handmade and niche products as consumers try and get maximum value out of the dollars they do decide to spend on discretionary items. There are opportunities for smaller designers to tap into this market.

article-page-main-ehow-images-a07-lp-jb-finance-footwear-retail-business-800x800The collapse of some of the larger fashion chains also open up opportunities for these smaller retailers to fill the gap and provide different, targeted products as well as personalised service. It is also worth remembering shoes aren’t always a discretionary item; kids need them for school and everyone needs a couple of pairs of shoes, so we would expect to see spikes in shoe retailing at the start of the year and at the beginning of a new season.

When the global financial crisis hit, retail trade slowed as Australian consumers tightened their spending and started saving, as a company with a rich history (and one that has seen the rise and fall of the economy over the years) how do you get bargain-hungry customer to open their wallets? What are some of the survival strategies as a company that help you ride the rise and fall?

Good customer service and innovation are both keys to the success, as is relevant product range and cash flow and stock management. It seems a lot to think about (and it is!). Some examples of what retailers are doing to attract customers in tough times are personalised styling sessions, opening the store after hours by appointment, VIP nights and involvement in community events.

Retailers must also be looking at offering a multi channel approach to retailing in response to consumer demand to shop online, via their smart phone and engage in the brands they love via social networking and other forms of eCommerce. Innovative ways to reduce costs such as through better supply chain management and better management of stock levels are often better ways to ride through the tough times, because the last thing a retailer wants to do is cut staff who are trained with product knowledge and customer service skills.

As the owner of a well-established footwear company, what strategies have helped you survive the 75 years of economic challenges, rise and falls, over the years? What were these? VM changes or customer incentives and loyalty programs?

A lot of my personal experiences as a retail business owner have been with key challenges facing all retailers, especially the smaller retailers. These include loyalty programs to retain and reward valued customers, as well as keeping staff skills relevant to offer customers the best service, product knowledge and assistance. Also, honesty is the best policy- if you don’t have the product, be very honest and help the customer find what they need elsewhere.

Customers appreciate honesty and will often come back for other products or recommend you to their friends. Direct mail is a great way to tailor messages to customers both as an information source and also to remind that new season’s stock is coming in. Other key campaigns are Back to School and end of season sales. Reaching our regular customers with this information is one of our customer service strategies, as we can send them the information first and thank them for their loyalty.

Many retailers tend to cut back on all their marketing and withdraw in a tough market, but the buying experts warn against this, why? how did you direct your marketing?

There are many creative and innovative ways to market your business even where there is no budget. Some examples are email marketing, social networking sites and leveraging off the marketing campaigns of your shopping centre, precinct or local council. Marketing is more than just paying for advertising. However, local papers often have great deals during downturns because they are facing a downturn themselves and are keen to get community businesses on board.

The continued growth of online shopping in Australia has affected bricks and mortar retail – should companies embrace this and operate an online site in conjunction with their wholesale / retail – how do you juggle the trio? And can you make it an effective recipe for profit?

shoe_rack_retailMulti channel retailing is a must if retailers want to survive in the future. Savvy retailers realise they have to reach their customers in the spaces they’re in- these include online shopping, social networking, m- Commerce and through your website. Of course, in store is still a key part of the mix, but the challenge is for all of those channels to work seamlessly together to offer an awesome customer experience wherever they choose to be. The ARA is working hard to get our members into the online space and educated about the endless opportunities it opens up.

The ARA has been running a series of Engage in E-tail seminars, bringing in the experts of the online world to share their success stories and give retailers the tools they need to embark on multi channel retailing. The last seminar is running on 25 October 2011 on the topic M-commerce and Social Media for Retail- download the registration form here. The ARA Retail Institute has just launched the Diploma of Retail Management- Multichannel to respond to the growth in online and multi channel retailing. Aspects of the course include managing the supply chain and ordering process and online customer service.

Retailers should look at accredited training to deal with the challenges of a new trading environment. For more information call 1300 368 041, head to www.retail.org.au or email, training@retail.org.au

Multi- channel retailing can only be a recipe for profit when you are offering new and existing customers good service across all the channels through which they choose to do business.

Many footwear retailers have found consumers are now using their stores to try on certain styles, only to buy them online, do you think there should be a charge for trying on in-store? How do you think this can be combated?

Only an individual retailer can make the decision on whether or not they charge for the fitting service. The decision will depend on the time and expertise it takes to conduct the fitting. However, retailers should ensure they are not charging for services at the expense of potential sales. The aim is not to alienate customers at the expense of sales, but instead to put real analysis into the costs versus benefits of providing a service.

Online shopping is not something to be combated; it has to be embraced, and I would encourage all retailers to get into the online market in a way that’s relevant to their target market and strategic goals.

Do you think there is anything the government can do to ensure the sector’s survival? Do you think more needs to be done for the shoe industry specifically?

Quite often it is tied into the general fashion sector. In the short term, the RBA needs to look at cutting interest rates in the lead up to Christmas. For the future viability of the retail industry, there are some key issues government needs to look at including;

– IR reforms including reviewing penalty rates and ensuring workplace flexibility for the benefit of employers and employees
– Reduction of inefficient business taxes
– Lowering of the Low Value Importation Threshold (LVIT) to put retailers on a level playing field with their overseas counterparts who are also marketing products to Australians
– Creating a more level playing field between shopping centre owners and retailers when it comes to negotiating leases, including third party reporting of turnovers, first and last right of refusal, independent market rental valuation and national registration of leases to make for more transparency in the negotiation process


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s