Anthony Wilson is an influential industry retailer in Australia and the owner of four Saltwater Wine stores and seven Stormriders stores.
He reached a breaking point this summer after the largest pure play online industry retailer in the country and some industry brands were heavily promotional online during the peak season.
Anthony sent a blistering email to industry executives, and the email has been making its way around the industry.
I followed up with Anthony to ask him more about what is happening in Australia and why he had finally had enough.
His stores have earned numerous awards over the years from the Australian Retailers Association, including Australian Independent Retailer of the Year in 2014 and 2015, and as part of the annual Australian Surf Industry Awards.
You recently sent an email to industry brands critical of some of their practices. What sparked your criticism?
Anthony Wilson: It has really been a growing frustration over what has been going on online. I’m not sure what swell.com is like in the U.S., but in Australia, SurfStitch is non-stop promotional.
And then this summer (in Australia), a bunch of industry brands were on the promotional program, too.
It was pretty disappointing. I felt brands weren’t being mindful or considerate of us in physical retail land. To be honest, I was also sick of hearing about independent retailers being “brand partners” and “valued,” and then brands having little or no regard for that relationship, particularly online.
Why is online such an issue?
Anthony Wilson: The difference between online and offline is summed up really well by this recent comment in The Guardian by Glenn Shoosmith of Bookingbug: “People shop online to save time and money: People shop offline to spend time and money.”
Online and offline are not two separate sets of customers. You can’t be promotional in one channel and premium on the other.
The statistic here in Australia is something like over 40% of all retail sales are influenced by online and 65% of customers research online before shopping in-store. With no geographical boundaries or limitations, any online promotional activity affects all of us. That’s an issue for a premium, branded business model.
In the case of brand activity online, when a brand is promotional, advertises a sale, discount, gift with purchase, free voucher, etc. through their social media and website, it impacts every single “retail partner” of that brand across the country.
Whether intentional or not, the brand is competing with its retailers for customers.
Are you worried about the viability of brick and mortar stores in the industry in the future?
Anthony Wilson: Yes and no. I don’t think it is going to get any easier in the short term. The good retailers will adapt and evolve their offer and our customers will vote with their wallet if we do a good enough job.
At the end of the day, people buy from people – humans are social creatures. The lion’s share of the business will always be in physical stores. Online is only 7% of total retail sales in Australia.I don’t think that will change too much unless we become price driven and commoditized. If that happens, viability will definitely be an issue.
What do you think brands should do differently?
Anthony Wilson: We keep hearing how important core retail is to the industry. If that is truly the case, brands need to work with us to help ensure we are relevant and can compete and be valid in today’s “omni channel” marketplace.
What am I talking about? Don’t compete with us for our customers online, actually, don’t compete with us full stop. Give us tools. Give us segmented product that allows us to differentiate. Give us first release product for 6 or 12 months. Rather than just asking us to repost brand content and linking to brand social media accounts, how about it goes both ways? How about posting some of our content and sharing some of those customers with us?
You know, brand websites should be a tool for us retailers to use but for the most part, there’s no way. Why would we refer a customer to a brand website when there is a banner ad for 40% off sitewide or a gift with purchase, or a pop up encouraging them to sign up for a newsletter and get a free voucher?
It’s the same with surfboard manufacturers. Their websites hold a wealth of information on the models, volumes and dimensions and should be a selling tool for us in store. But now there’s “buy now” and “build your own” buttons everywhere. Of course we aren’t going to refer anyone to their sites or social media networks.
I think we need to look at the consumer electronics brands. For example, the LG’s website is packed full of info and they guide the customer on where to buy! Look, I’m not trying to tell brands how to go about their business. I just think they could be more mindful of the relationship with their retailers and the potential for damage.
What do you think retailers should be doing?
Anthony Wilson: I don’t like to dish out advice to other retailers, every business is different. I just think we all need to be aware of what’s going on around us, you know, connect the dots. What’s going on online, what’s going on in your trade zone. Understand what brands are working and what’s not. Buy to performance not history. Work with brands you see a future with.
Are you changing how you do business or work with brands?
Anthony Wilson: Yes, definitely, and on a number of fronts. We have premium stores in premium locations, providing premium service. We have to sell premium brands and premium products to achieve premium prices.
We can’t operate on a promotional model, which means I need to align with brands that support premium, not commodity, and that support us rather than compete with us.
I need to insulate and protect my business from the effects of online promotional activity from SurfStitch and the like. I need to align with brands that have little or no exposure in that world or at least understand and have control of their brand value.
What specific strategies are you implementing?
Anthony Wilson: In the online/social media space we have stopped sharing our customer. We are not direct linking from our social media posts, blogs or website to any brand accounts or sites and we have replaced calling out brands with the @brandxyz and are instead using hash tags.
We need greater control of our own destiny so we have been doing some collaboration products with some brands and we will be looking at selling more of our own product as well.
Vissla doesn’t sell to SurfStitch so we are working closely with those guys. Likewise the Mad Hueys also aren’t on SurfStitch and the brand has done really well for us.
We put a lot of energy into Hurley as we are pretty much the exclusive store that carries the brand across our region. I also think their segmentation strategy is on the money.
Billabong has some plans in the pipeline that I am looking forward to seeing. Rip Curl has been the least promotional and along with Oakley, seem to have control of their brand value.
We are looking really closely at categories and brands that are over distributed. For example, we no longer carry Skullcandy and will be looking at whether we continue with GoPro.
What role do you think pure play online retailers are playing in the industry?
Anthony Wilson: I think for the most part they are perpetuating a race to the bottom and SurfStitch is the worst offender.
SurfStitch keep talking about “online shopping habits are changing and consumers are buying based on content and engagement rather than just on product and price” but I think that’s all bull. The only way they compete is on price.
Right now, they are the single biggest threat to core retail. They have been non-stop promotional since Black Friday/Cyber Monday.
Last week, they had another 50% off sale that has been extended for the fourth or fifth time or take an extra 25% off sale items or something. It’s all churn and burn, there’s no story telling or brand building going on. We see it playing out in-store all the time with customers wanting us to price match or even honor a free voucher SurfStitch has given away.
It’s frustrating because when you actually dive into it they don’t have the size or the color the customer wants but by then, the damage is done. The customer’s worldview is that’s what they should now pay for industry product.
If SurfStitch actually did what they said and elevated their offer and “sold on content and engagement” the world would be a better place. Do I think that’s going to happen? No, not when you have the founders on record saying they intend to “cannibalize” brick and mortar retail.
SurfStitch recently bought Surf Hardware/FCS. Will you change how you buy those brands now?
Anthony Wilson: A good portion of Surf Hardware’s business is product that retailers can get elsewhere – leg ropes, covers, grip, luggage, softboards and bodyboards.
I think they have underestimated the potential for backlash from core retail. It sucks for the Surf Hardware guys. I think they have been doing a great job. But how do I rationalize support for them when all roads lead back to SurfStitch? I don’t think I can.
Five years from now, what do you think the industry will be like?
Anthony Wilson: I think the disciplined brands and retailers that are premium and clear about their brand positioning and have control of their offer will be doing well. As an industry we are a branded offer and we can’t live in the commodity space.
I get the sense that there has been a change in the wind direction recently and there is a refocus on brand values starting to happen.
I really like Seth Godin’s definition of a brand and its value and is probably a good parting thought. That is: “A brand is the set of expectations, memories, stories and relationships that, taken together, account for a consumer’s decision to choose one product or service over another.
“If the consumer doesn’t pay a premium, make a selection or spread the word, then no brand value exists for that consumer. A brand’s value is merely the sum total of how much extra people will pay, or how often they choose, the expectations, memories, stories and relationships of one brand over the alternatives.”
