by Kath Walters and Michael Bleby | BUSINESS REVIEW WEEKLY
Allowing people to shop when they want is changing retail and the smart businesses are adapting fast to keep up.
It’s 1.30 in the morning. Bill Lancaster is finishing his working day and heading to the gym. Until a few months ago, he was scrambling to keep fit. “One of my sons noticed a 24-hour gym [Jetts Fitness] and said to me, ‘That’s just what you want, dad’. I’ve been going for a couple of months, now. I usually go about 11.30 at night, when it’s the afternoon in Europe,” he says. “I’ve really started to pick up my fitness.”
Lancaster is a private banker, dealing in securities, and his customers are all in Europe. He works long hours to be there when they need him and to “do all the Australian things” he has to do each day. His customers live in Europe but Lancaster doesn’t want to live there. His family prefers the lifestyle here and Lancaster loves our weather. “I hate the European winter,” he says.
The late night work-out at the gym is helping keep Lancaster calm as he negotiates a big teal in Switzerland. The parking is a breeze and here is no wait for the equipment, ‘That is part of the attraction. Before, if you tried to get to the gym but it didn’t always work. I would miss out on the exercise and I would get agitated.” Jetts Fitness, a 24-hour gym, which topped the BRW Fast Franchises list, published last week, is in the vanguard of companies catering to the changing need of consumers for after-hours access to shops and services. In the past five years, Jetts has grown from one gym in 2007, when it started, to 155 gyms and turnover of $43 million last financial year.
There is little publicly data available to measure the increase in 24-hour shopping.
But the trends are already clear in the US and it is only a matter of time before behaviour in this country follows suit. In November last year in the US, online purchases on Cyber Monday, as the Monday after Thanksgiving is called, soared after hours for the first time to Levels previously only seen during lunchtime on that day in previous years. Instead of sales tailing off in the afternoon, as they had in previous years, from 6pm east coast (New York) time, the number of sales started picking up again, remaining strong until midnight. “Consumers are shopping well outside the bounds of retail hours and mobile is one of the things that has changed the picture dramatically,” John Squire, the San Mateo, California-based chief strategy officer of IBM Smarter Commerce, which tracks and analyses purchasing behaviour, says.
That kind of result suggests a strong demand from consumers and a strong shift in buying behaviour, The issue was clearly stated by the Productivity Commission report released in November after its inquiry into the parlous state of the retail sector. The commission recommended that trading hours across Australia be completely deregulated.
However, in states such as Queensland and Western Australia there is still strong opposition to complete deregulation. In WA, feelings ran so high that the government held a referendum on Sunday trading where the proposal to extend opening hours were roundly defeated.
The opposition comes from a diverse group of interest groups — employee groups are concerned that workers will be required to work longer hours while small and medium-sized retailers are concerned that the larger chains will be the ones that benefit. WA’s independent grocers fiercely opposed the proposal. For consumers it’s a different matter.
People such as Lancaster welcome the ability to buy services and goods outside traditional retail and with the advent of online retail, it’s already happening. According to Paul Gardner, chairman of the Eye On Australia report, which covers major consumer trends each year, online retail with its 24-7 service it taking increasing market share from 9-5 retailers. “Let’s start with the basics: if it is not perishable and it fits into an envelope or a box, you are going to buy it online,” Gardner says.
“You could drive to the city, get caught in traffic jam, pay $28 to park, try on your outfit in a crowded multi-sex change room and queue up and wait for six hours to pay for your purchase. Or you can buy online.” 7-Eleven was an early mover in extended trading hours. It opened its first store in Oakleigh, Melbourne in 1977 and today has 650 stores. Despite liberalisation of trading hours in many states and more convenience store competition, 7-Eleven has been growing fast in recent years from 350 stores in 2005. In 2009, it opened it first “concept store” with a more modern food and grocery range and espresso coffee.
Last year, the company bought Mobil’s retail fuels business, expanding its reach and extending its trading hours even further. Coles and Woolworths have had mixed results from opening their supermarkets’ extended hours. Some Coles supermarkets open 24-hours-a-day; some have then rescinded the initiative. A 24-hour service is not just about goods, however, it’s also about services.
As online buying increases, Australia Post is changing its ways, too. For Australia Post, households with both adults working make it less likely that someone will be at home during the day to receive a parcel and in October last year, Australia Post started using electronic lockers that allowed customers to collect their parcels after hours.
The company that makes and manages the lockers, TZ, sends a code to the customer by SMS. “Australians today are living a 24-7 lifestyle and there is a huge demand for products and services that deliver access and efficiency,” says TZ’s executive chairman, Mark Bouris. “With such rapid growth in online shopping, expediency is going to be vital for the future of package delivery”.
The growth of online purchases means traditional courier companies such as TNT and Star Track Express, an Australia Post-Qantas joint venture, are doing more deliveries to consumers than ever before, in contrast with their traditional practice of dealing with stores or delivery depots that were open all the time. To cut down on costly redeliveries, these companies are investing in drop-off facilities close to people’s homes such as petrol stations o shopping centres.
Australia Post CEO and managing director Ahmed Fahour said when announcing the initiative, ‘Australians are receiving more parcel: than ever and many of our customers are rarely at home during the day and find it increasingly hard to get to a post office.
The parcel locker trials will enable our customers to access their parcels at a time that is convenient for them.” Homevisitingdoctor.com.au is an after-hours medical service that has been operating for decades with little fanfare. General practitioners deputise the doctors employed by the service to provide their patients with after-hours care for “urgent episodic treatment”. These include procedures such as inserting or re-inserting catheters, wound treatment and review or non-emergency but urgent matters.
“The patient has a fall, the baby has a fever and we go to the patient to treat the problem,” says the director of business development, Julian Adams. Last year, the service’s doctors attended 140,000 patients, of which 77,000 were in aged-care facilities. All are referred back to their GP for routine treatment.
The service was co-founded by Julian’s mother, Jocie, a nurse, and has 14 offices nationally. Last year, it turned over $9 million. All these are signs of how consumer behaviour has changed — creating an opportunity for businesses that can meet their needs. A study on the issue of trading hours by University of Western Australia law school assistant professor Tracey Atkins released in December last year, recommends complete deregulation. “The majority of arguments put forward against deregulation, don’t eventuate,” Atkins says. “Deregulation is beneficial to consumers, employers and employees.
“For consumers, it means increased choice, cheaper prices and better services because it increases competition. For employees, there is increased employment and flexibility that allows them a capacity to work in modern lifestyles, they can make up the hours From that greater spread of choice. “For businesses, the likely outcome is an increase in sales and choice about when they can open and what they can sell.” The last time traditional retailers ignored a shift in consumer behaviour, they lost out to new online retailers. They ignore this shift in behaviour at their peril.
Vittoria Shortt is the chief executive of retail for Bankwest. As a consumer she’s a fan of online shopping. With two small children and a demanding job, she hasn’t the time to shop during the day. But when the kids are in bed, its a great opportunity to do online shopping, pay the bills and get the school program organised. She buys the groceries online, and clothing that ranges from corporate wear to casuals. Shortt says: “There is nothing like shopping in the comfort of your own home. You get a cup of tea and it doesn’t matter what you are wearing’ Most clothing is delivered free of charge, with a free of charge returns policy; that makes it worth the risk and cheaper than paying for parking. She has mirrored this desire to shop out of normal hours by extending Bankwest’s hours and introducing Sunday trading at many of its branches. “We want to change the face of banking.’ says Short “Part of that is being more available to customers.
We know they have been frustrated with the opening hours of banks, so we decided to open on some weeknights and weekends.” Bankwest matches its hours to those of the shops and traders around, but not all its branches (Shortt says the bank calls them stores) keep the same extended hours. “If we have a store in a shopping centre that is open on Sunday, we will open on Sunday” This means that home buyers can attend “open houses’ on Saturday and then come and talk about mortgage products with Bankwest an Sunday.
Bankwest does more than open its doors. “We have coffee and play area for children. We even have a Wii in some stares. And in some of our concept stores, we have tablets and smartphones so we can demonstrate how to use our apps (to access banking and other service online],’ she says. Shalt will not discuss the data on how many customers visit during extended hours but says the bank is ‘comfortable that the traffic justifies the cost including the extra expense of penalties paid to staff.