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UTAS Conversations: Retail revival in Tasmania

Historical rhetoric in the retail industry is that small shops are doing it ‘tough’ and are under threat from the national chains, discount stores and online retailers. For some time, especially in the lead up to Christmas, the plea from small business lobby groups has been for consumers to, in effect, ‘save’ small shops by avoiding their larger competitors, or face the inevitable decline in choice when small stores are forced to close down.

Consumers are presented with the dire prediction that their ‘high street’ or town will mirror those in many other parts of the developed world – a dystopian wasteland of chain stores, discount outlets, banks and charity shops. Perhaps surprisingly (and pleasingly) in Tasmania, this is not the case. My current research examining small Tasmanian retailers, finds that the majority of small, independent traders do not perceive their trading environment to be at all tough or ‘hostile’. Indeed, positivity in the local retail industry is palpable, as is evidenced by the increasing number of small operators opening new stores in the CBD, suburban and outer-lying areas across the State. This is no doubt a result of growing economic confidence, as well as a reaction to what academics and cultural and economic commentators call the ‘MONA effect’.

Retailing is the second largest employer in Tasmania and the most recent figures from the ABS indicate that almost 12 per cent of the working population is employed in the retail sector. Tasmania has over 4,000 retail businesses, and while this figure includes all types of retail offering – large, small, chain, franchise, online and commission-based - it is evident that retailing is a significant industry in Tasmania and one that employs a large number of Tasmanians). In 2015/16 the value of retail turnover in Tasmania was $500 million and Tasmania currently leads the rest of Australia in retail sales growth.

Although small stores may not necessarily employ as many staff as the national chains, small operators support the local economy through stocking locally produced goods from local artisans and producers, and by promoting other small businesses in their local area. This trend is partly in response to growing consumer demand to ‘buy local’ as well as a growing move away from mass-produced gifts, home-wares, clothes and other items. It allows small shops to manage their inventory in a cost-effective manner and keep transport costs down. In their own way, small retailers contribute to the growing culture of local ‘making’ and ‘producing’ that is now thriving in Tasmania.

Many new entrants into the Tasmanian small retail market are not afraid to present sophisticated offerings, often in very small stores. These sorts of niche boutiques have been operating in larger cities for centuries. Think of the small delightful shopping arcades in Melbourne, London and Paris packed with quirky, erudite and often highly specialised shops. Until very recently, these small formats did not survive long-term in Tasmania. However the rise of internet-shopping, rather than sounding the expected death-knell for small stores, has actually opened up new markets for many independent operators. Instead of eschewing the internet as the enemy of their bricks and mortar stores, savvy small retailers have embraced the internet as a means to supplement their offerings, allowing them to attract and retain new customers. Smaller sized shops are popping up all over Tasmania as retailers realise they can supplement a smaller floor space with an online inventory and promotion strategy.

Our research shows however, that there is still a significant proportion of small retailers who are yet to engage effectively with the ‘digital economy’. Around 44 per cent of retailers in Tasmania do not have a website and around half do not use any form of social media (Facebook, Instagram, Twitter, etc.). There is clearly room for improvement in the digital space and the challenge is on for many small firms to step up in this area. Small retailers should ensure their business is ‘visible’ to their customers online (especially as over 70 per cent of Australians purchased something online in the past year, according to the latest Sensis figures). This could be as simple as creating a Facebook page or an Instagram or Twitter account for their business and using these digital tools to connect with the 79 per cent of Australians who use the internet on a daily basis. Amongst retailers we surveyed who use social media to connect with customers, Facebook was overwhelmingly the most popular platform (followed by Instagram and Twitter), with a large number of retailers choosing to use just Facebook. This makes sense – 93 per cent of Australians who use social media are on Facebook (26 per cent use Instagram, and 17 per cent use Twitter) and for many small retailers this is a cost-effective and relatively simple platform to promote their business. Feedback from consumers shows that they expect businesses to have a web presence (especially in light of the decline of the Yellow Pages) and that it must be attractive, relevant and up to date.

Small Tasmanian retailers who can capitalise on unique offerings coupled with superior customer service and multi or omni-channel customer engagement strategies will survive and thrive in the new retail environment. Tasmania is in the spotlight and local shopkeepers, entrepreneurs, producers and innovators are flourishing in the glow. There is in effect a significant retail revival happening across our island, this is something to be celebrated, supported and nurtured by us all.

Dr Louise Grimmer is a retail and small business researcher in the Institute for the Study of Social Change at the University of Tasmania. Louise is currently conducting the second phase of the Tasmanian Retailing Research Project which is a longitudinal study examining the impact of various resources on small firm performance.

Published on: 23 Nov 2016 11:52am