‘The Iconic’ & the changing face of online retail – stage 2

6 07 2012

this article in Business Insider by Alan Kohler covers the new (6 month old) start-up Australian online retailer The Iconic.

 

The Iconic is a full price, premium service online-only retailer of clothes & shoes for men & women, with prompt and FREE overnight delivery, focussing on Australian brands, and they’re also gradually developing international brands, and have a generous returns policy.

 

this is a significant development – most online retailers target discounted prices but charge shipping.  it’s a major challenge to incumbent bricks-n-mortar retailers, especially Myer & DJs, who now can’t whinge that those mean and nasty overseas online retailers aren’t charging GST.

 

supposedly The Iconic is doing well.  time will tell if they’ll continue to thrive, or if they’ll need to compete on price against newer discount online retailers (the new retail arena will be online).  but doing a deal with Australia Post, who are desperate to stay relevant and profitable in a world of plummeting snailmail, is a master stroke of business acumen.

 

“the internet” isn’t just challenging bricks-n-mortar retailer’s cost model, it’s fundamentally altering what we consider to be The Retail Experience. there’s so much shit we just don’t need to physically walk into a shop & see with our own eyes any more before deciding to buy it. an increasing amount of stuff that we used to consider as “retail” will be relegated to “warehoused” status & bought online – we’ll make our decisions to purchase, or not, NOT based on the physical experience, but on personal recommendations from friends, social networks, 3rd-party reviews, and good old fashioned “virtual retailing”. taking up space in a shop, with minimum-wage humans trying to flog it is just becoming less necessary for more stuff.

 

the pain of transition has only just begun for bricks-n-mortar retailers.  they have almost nowhere to go (other than shrinking), and they’re paying top rent in massive shopping centres.  the retail landlords are also going to be whipped here.  i hope you don’t have shares in Westfields, Gandel, AMP Capital Shopping Centres, Mirvac, Centro, Stockland and the like – the writing’s already on the wall for them.

 

certainly there’ll be a continuing need for bricks-n-mortar retailers, after all everyone needs to educate themselves as to what size they are :p, and there’ll probably always be a market for the hands-on retail experience, as well as certain niches where hands-on buying is still desirable.  but i think it’s fair to say we’re moving out of the first phase and into the second phase of online retail.  the first was books, media, gadgets, some clothing & shoe brands, and niche products, growing from insignificance to significance & making bricks-n-mortar retailers whinge but do little to adapt or compete.

 

the second phase is the likes of The Iconic (and the overseas equivalents they’ve modelled themselves on) squarely aiming at bricks-n-mortar retailers on their own national ground, with the incumbents pissing into the wind trying to maintain both bricks-n-mortar and online presence.  the bricks-n-mortar retail scene will shrink, it’s inevitable.  there will be howls of pain and Special Pleading from the usual suspects, and they should be dismissed just as for blacksmiths, shoe repairers, milkmen and door-to-door insurance salesmen.  also during this second phase certain technologies will emerge that facilitate online retail to fill in the gaps and uncertainties of buying without first touching – high resolution monitors, laser biometric scanning, hand-held projectors, global size scales, and $deity knows what else.  i give it less than 10 years.

 

the third phase is where bricks-n-mortar retailers shrink to niche markets, up-market, bargain-basement, and to cater to those who insist on dragging their bestie or significant other to the mall for some good old fashioned retail therapy just like it was “back in the day”.  everything else will be a Star Trek-esque materialisation of goods at the front door within a day of a few points at a screen (not clicks, not touches), and this whole retail ecosystem battle will start afresh – online.

 

and that’s without considering the impact of 3D printers, which will wreak a whole new flavour of havock all on their own.

 

i guess it poses some interesting questions for urban culture.  what will the masses do instead of trudging up & down shopping malls as much as they do now?

 


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4 responses

6 07 2012
Tyroga

And that’s all without considering what nano fibres will be able to do I. The future, like constructing clothes on command and refashion themselves at the will of the wearer, never needing cleaning because the dirt would fall off as the garment shapeshifts from day wear to evening wear. ( I wonder if there’s already a patent for that? I could be a patent troll).

AND that’s without considering the Higgs! I mean a element that can give mass to otherwise ethereal elements, sounds like the start of replicator technology to me.

I do wonder what will happen to the shopping centres. Will they be developed in-place to be housing, that could be kind of cool. It all does seem to make the massive redevelopment by the likes of Myer as major waste of money.

With regard to The Iconic, the girls at work seem quite comfortable with it. Have seen packages coming in on and off for a while now.

For the first time ever I bought shoes online from the US, always a cagey activity because of how they tend to size their shoes, but then the pair I was replacing (with the exact same brand, style etc) I bought over there so I was kind of safe. Managed to buy two pairs of shoes for half the price of what I would have paid here. And having a size 15 foot it’s not always easy to find stock here anyway.

6 07 2012
Dylan O'Donnell

I think the impact of online is slightly overstated currently.

Consider that for all goods and services bought and sold in australia, online transactions account for about 4% .. hardly the empire killer Borders and Gerry Harvey would have you believe. It’s set to grow to 5% in the next year.

Also the conversion rate for a typical online store is about 3% .. but a physical store is closer to 50% for some brands.. or higher. (it’s pretty much 100% for a grocery store). The rent is worthwhile for this reason alone.

There will be a shift, there already is. But it isn’t as seismic as some predict. More like a gradual metamorphosis into something different, like what happened to photography.

my 2 cents.

d

6 07 2012
techydude

no argument there, Dylan, i didn’t mean to imply any sudden shifts – as i said, i reckon this 2nd phase will take about a decade, in which online transactions will make up roughly half. which is about the same time it’s taken to go from near-zero to the current 4%.

however there’s a difference between net “impact”, and the impact that that “impact” has on profit margins, the latter being amplifies & more keenly felt. the trend, prospects & challenges are clear for B&M retailers, who don’t like the prospect of losing their incumbency, and there’s countless examples of major businesses living in denial of their shifting realities, to the point of being paralysed – RIM/Blackberry is just one recent example. almost the entire newspaper industry is another, and that took only a decade before the dominoes started to fall.

as for Borders/A&R/REDgroup, my thoughts on what brought them down is already on record in 4 posts back in March 2011 :) – they, and only they, fell then because they were badly managed.

7 07 2012
techydude

Ty – nano fibers? i think you’ve been watching too much Continuum :p

dunno about the retail spaces – turning the wide flat spaces taken up by the Myers/DJs former occupants (or even an entire mall) into something with windows in every apartment that real people would want to live in would require pretty major redevelopment. tho if any industry has shown there’s plenty of money with which to do such things, it’s the domestic housing sector.




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