Story transcripts

The Retail Revolution

Friday, August 26, 2011

Reporter: Charles Wooley
Producer: Stephen Rice

Before this story, we had no idea how big internet shopping was.

Charles Wooley spent the last week talking to 'e-tailers', as they're known, whose businesses even in these difficult times are doubling in size every year.

Meanwhile, traditional retailers are facing their biggest crisis since the Great Depression.

So why are more and more people choosing the online option? Well, there are some compelling reasons.

There's a bigger range of goods out there in cyber space. It's open 24/7. There's no waiting in queues. And, although sometimes it's cheaper, it seems that what the customer is really going for is the ease and convenience.

No matter where in the world you order from, within 48 hours you get the thrill and excitement of opening a present from yourself.

Story contacts:

For further information on businesses featured in the program:

Net-A-Porter (Natalie Massanet): www.net-a-porter.com

Surfstitch (Justin Cameron and Lex Pederson): www.surfstitch.com

Glitzern (Caroline Price and Moira Rogers): www.glitzern.com.au

International Fashion Group (David Mendels): www.internationalfashiongroup.com.au

Full Transcript:

CHARLES WOOLEY: I’m here for a privileged glimpse of what the art of shopping increasingly looks like in the 21st century. And where’s this from?

JO: From the net. Net-A-Porter. It’s just great because if it isn’t the right size and some of them do vary…

CHARLES WOOLEY: It’s great Jo. It’s a bit short isn’t it?

JO: It’s for my skinny days.

CHARLES WOOLEY: You never need to leave home, except to wear it. You can even shop in your pyjamas if you want – not that one of Sydney’s top fashion stylists, Jo Ferguson, would ever do that.

JO: This is probably more of a work look for me.

CHARLES WOOLEY: Online?

JO: Online.

CHARLES WOOLEY: No wonder internet shopping is embraced by women everywhere. The latest in international fashion, straight to your door and – thanks to the booming Aussie dollar – at half the old price. Which in Jo’s case is just as well. How much is that, by the way? We haven’t talked prices.

JO: I think this was around about seven or eight thousand dollars.

CHARLES WOOLEY: Oh! It’s a big business.

JO: It’s a big business.

CHARLES WOOLEY: A big business which is now being blamed for the worst crisis to hit traditional retailers in more than 50 years. Stores are closing all across the country, and consumers have just stopped spending. But not consumers like Jo. Not when all you have to do is click on your favourite e-tailer, which in Jo’s case is luxury fashion site Net-a-Porter, choose what you want – say a bag – and before you can say, “I’ll take it!” – your credit card details are on their way. And here, seconds later on the other side of the world, is where Jo’s order arrives. Where are the people? Where are the staff? Where are the check-out chicks? Here in the cyber world it might look empty and deserted but this is Net-A-Porter’s warehouse in London and here they get more than three million visitors – as they call them in the cyber-world – every month. Jo was one of them and what Jo was looking for was a handbag and – ah! – here it is here. Marc by Marc Jacobs. A designer label in a stroking fuschia colour for which Jo will pay $240. Now that’s the same price as she would pay in Australia. So, as a mere bloke I ask, why buy it on the internet? I mean, where’s the shopping experience?

JO: Well I think it’s like giving a present to yourself and you know, the excitement of the doorbell ringing and a box arriving and something beautiful in it. You feel like you’ve treated yourself.

CHARLES WOOLEY: And what makes her customers happy makes Net-A-Porter owner Natalie Massanet happy…

NATALIE: Here we’re photographing all the products that go live on the site.

CHARLES WOOLEY: …And very rich.

NATALIE: And then the customer can then go on and click and buy what that model is wearing, head to toe.

CHARLES WOOLEY: Natalie started out as a fashion journo with a dream to be a magazine editor. Now she has her own online magazine and e-tail store, not just telling women what’s in style, but selling it to them at the same time.

NATALIE: What we’ve done is we’ve made the excitement and the selling all happen in one location.

CHARLES WOOLEY: That’s brilliant.

NATALIE: Well, it’s fun.

CHARLES WOOLEY: Or clever.

NATALIE: It’s fun.

CHARLES WOOLEY: Natalie’s transformed a business she started in her basement 10 years ago to a company employing more than 1,000 people and worth half a billion dollars – and growing.

NATALIE: You know, we get 3,000 job applications a week. Isn’t that crazy?

CHARLES WOOLEY: No it doesn’t surprise me ‘cause until I did this story I had never heard of it but my kids knew all about it.

NATALIE: Right.

CHARLES WOOLEY: And all the girls in the office know all about it. Now my own abiding image of shopping – the first I can remember as a kid – was Audrey Hepburn in ‘Breakfast at Tiffany’s’. It was the early 60s and the high watermark of that American gift to the world, the Department Store. Turns out, it’s Natalie’s favourite movie, too.

NATALIE: The moment where she is looking in the window and with her coffee cup

and a bagel. You could switch that today to Audrey standing in front of her computer screen with her coffee cup and a bagel. I think shopping on Net-A-Porter is very ‘Breakfast at Tiffany’s’.

CHARLES WOOLEY: Big question is, how do I know that this thing will fit?

NATALIE: If it doesn’t fit, we pick it up from you no questions asked and returns are free and you don’t have to go to the post office, you just close up your box and ding-dong, somebody comes and gets it from you. You know, that’s pretty good service.

CHARLES WOOLEY: Meanwhile, Jo’s bag of many colours is beginning its long journey. So at the end of the process the only thing to do is hand the package to my stylish Gucci-clad driver and to hope that two things happen – that it gets there on time and that it Jo is happy. It is indeed a brave new world but not everyone likes it.

DAVID: The big difference here is the softness and the feel of the…

CHARLES WOOLEY: And I can’t do this on the internet can I?

DAVID: You can’t do this on the internet.

CHARLES WOOLEY: David Mendels is old style. He’s been in the rag trade for 50 years and can’t understand how people can buy stuff that they can’t see and touch.

DAVID: Isn’t it nice to be able to walk into a store you know, pick up a pair of trousers or a pair of jeans, try them on, know they feel good, know they’re the right size?

CHARLES WOOLEY: Or alternatively, the delivery man comes up with your parcel, knocks on the door and you open it up –

DAVID: And guess what? It’s the wrong size.

CHARLES WOOLEY: Well, you send it back.

DAVID: That’s right, but you haven’t got it to wear out that night.

CHARLES WOOLEY: As owner of International Fashion Group, David’s one of the Australian retailers who’s been fighting to have the Goods and Services Tax put on everything bought online from overseas, so that businesses like his can compete. It’s only fair he reckons and he might have a point.

DAVID: We want to see at least the people who can buy online for up to a $1,000 pay duty and GST as they do in every other country.

CHARLES WOOLEY: So what’s the worst that can happen?

DAVID: Well, we’re going to see thousands and thousands of jobs lost, this is for sure.

CHARLES WOOLEY: Unfortunately for David Mendels and all the other cranky Australian retailers, the argument’s pretty much settled by this bloke – the courier who’s turned up at Jo’s place in Sydney only 48 hours after she ordered from London.

JO: Oh great, thank you very much.

CHARLES WOOLEY: …Easily beating me back to Australia and delivering Jo her shopping fix.

JO: Oh wow I love it! My friend will die. It’s fabulous.

CHARLES WOOLEY: Now many Australian retailers are deciding – if you can’t beat them, join them. Caroline Price and Moira Rogers have spent four years building up their boutique jewellery business, Glitzern, in Melbourne. It’s a wonderful little shop just around the corner from great bookshops and Melbourne’s espresso icon, Pellegrini’s. This area is my idea of a real shopping experience. But the sad reality is, it’s not enough.

MOIRA: We’re closing down and we’re going online.

CAROLINE: Yeah, the business is still going forward but the physical doors are closing, so…

CHARLES WOOLEY: Will you still get to wear the Sargeant Pepper gear online?

MOIRA: Oh, I hope so.

CAROLINE: Or we can wear our pyjamas.

CHARLES WOOLEY: Now the girls are closing down. Not their whole business, they’re quick to point out, just the shop. I don’t know if I like this brave new world…

MOIRA: No, I know. Well look, I’m sort of with you but I’ll still shop, but I still love the idea of lying in bed in my pyjamas watching ‘Magnum PI’ and selling things online.

CHARLES WOOLEY: Well this is great for you, I’m not sure it’s so good for me.

MOIRA: Well I’ve never seen you in here, Charles.

CHARLES WOOLEY: No that’s true. And there’s the rub. We may say we like the experience of nice little boutique shops like this, but we’re actually deserting them in droves. Is it any wonder Caroline and Moira are packing up when the rest of us are spending 15 billion dollars a year online? Well, why would you live and work in the city when you can be here?

JUSTIN: That’s the benefit of being online.

CHARLES WOOLEY: And when you see how the boys from SurfStich.com live and work, you wonder why anyone would want to spend their days selling stuff the old way. Can you see the whales go past?

LEX: Every morning.

CHARLES WOOLEY: It does seem a bit dull when you can do it from your front porch in Byron Bay.

JUSTIN: Let’s go hit it. ‘Bout time we had a paddle?

CHARLES WOOLEY: Justin Cameron and Lex Pederson started selling surf gear online from a shed in their Sydney backyard just a few years ago.

JUSTIN: We had an old shabby laptop and we gave eBay a go. We had board shorts and a few t-shirts and within a week, we’d sold out of our entire stock.

CHARLES WOOLEY: So you were a couple of would-be surfer bums who just wanted a nice, paying hobby?

JUSTIN: Yeah I mean, what we wanted to do was actually go and start a surf shop but we didn’t have the money to do that.

CHARLES WOOLEY: Now the business is worth $30 million a year and doubling every year, they’ve recently moved the whole thing – including nearly 100 staff – to a brand new warehouse on the Gold Coast.

JUSTIN: 4,000 square metres, um…

CHARLES WOOLEY: 4,000 square metres?

JUSTIN: Bit of a change from ah my backyard shed…

CHARLES WOOLEY: Three years ago?

JUSTIN: …Three years ago. Yeah, it’s been a been a pretty phenomenal change for us.

CHARLES WOOLEY: Look at that. So while the boys head off to find some waves, I’m going to do some surfing of my own. Hmmm, trout fishing gear at half the price I pay in town! This is a wave I need to catch. Those waders are a bargain! And that nice eight-weight Loomis rod. Ohh, should I? Go on! It’s only a click away. So will the High Street of the future become deserted? The Queen of Online Shopping doesn’t think so.

NATALIE: The High Street will be populated by beautiful stores that pay a lot of attention to their customers and in the end, that’s a great thing for the customer. It’s the oldest wisdom of the market place, ‘when the world changes, the smart money changes with it’. And so as the tired old tide of retailing ebbs away, these girls are getting with the flow of the bold new tide of e-tailing.

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