Kmart chief Guy Russo delays online shopping reform

Kmart chief executive Guy Russo has said he’s not thinking about the internet just yet, preferring to focus on the in-store experience so customers can get the cheapest products without having to wait days for items to ship.

But while the move echoes those made by other Australian retail entrepreneurs including Gerry Harvey, analysts say given Kmart’s place in the market as a retailer always aiming for cheaper prices, waiting to develop a comprehensive online strategy isn’t the worst move.

“There’s still life in the offline world, and there always will be,” Telsyte senior research manager Sam Yip told SmartCompany this morning.

In an interview with Business Spectator, just days after Russo criticised retailers for not updating their business models and sacrificing profitability, Russo said there is more opportunity for him to focus on getting stock into stores rather than focus on retail.

“There’s so much more opportunity for friendly and faster service at the store. And there’s still a lot more opportunity to drop prices even further for that customer that wants to go outside of his four walls at home and enjoy a great shopping experience.”

“Maybe in a few years’ time I’ll have a look at it, but I’ve still got so much more opportunity to get those jeans down even cheaper, to get that crockery down even cheaper, and plates and things that people need.”

While Kmart already allows customers to shop online, Russo says his priority is to ensure stock is always available so customers won’t be frustrated when they can’t find what they need – which is often a catalyst for shopping online at overseas stores.

However, Russo did say the internet is “the best competitor I’ve got right now”, in terms of price, but once again said the priority for him is overall convenience.

“I can guarantee that it would be a lot cheaper still to buy at Kmart than to buy something on the internet. It would cost you more for the taxi fare to even get there or the courier to drop the product off.”

While some big-name retailers have been criticised for delaying their internet strategy, Yip says there’s a benefit in waiting – especially when you control a significant portion of the offline market and can offer more convenience in-store.

“We talk all the time about how online retail is taking over, but this type of strategy makes sense. There is still a need for in-store merchandising, marketing, and so on.”

“In the past 24 months, Guy Russo has made some massive changes at Kmart, and they’ve been able to engage their marketing with consumers and simplify pricing by rounding everything off to the dollar. The way they’re doing it is the best way to engage consumers offline.”

And customers are still responding, Yip says, which makes the decision to delay online reform a sensible one.

“It’s no surprise they’re not thinking about online just yet. Australians are used to buying at Kmart, and for many people that’s still the most effective way they shop.”

“Multichannel retailing can mean lots of things, and this is just one of them.”

This article first appeared on SmartCompany.