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Is growth and expansion on the cards for Australian businesses?
If the last few years have taught us anything, it’s that businesses must constantly adapt and evolve in order to keep ahead of the competition. While the broader macro environment has led many businesses to shift their focus from raw growth to profitability, that doesn’t mean they can stop focusing on customer growth altogether.
Retailers, and other businesses, should consider which is the most efficient path to growth given their current situation. For some, this might mean launching a new flanker product to increase share of wallet with their existing customer base. But for others, especially those who have completely saturated their local audience, selling to the equivalent customers interstate or overseas could be more lucrative.
Businesses can’t lose sight of customer growth.
Recent research from YouGov, commissioned by Shopify, revealed that the cost of acquiring new customers is the second most significant challenge for businesses, behind inflation. Yet 24 per cent of the surveyed businesses are reducing their marketing spend. By adding new (but complimentary) products to their stores, or exploring new markets, there are ways retailers can grow, without doubling down on marketing expenditure.
When it comes to growing an existing customer base, diversifying products is key. A clothing brand, for example, could expand into categories such as jewellery and footwear. By encouraging an increase of average order value of each customer — even if only by an incremental amount — businesses can realise a substantial effect on the bottom line, without the outlay costs that are associated with acquiring new customers.
Alternatively, businesses can drive growth by selling through new channels. This could include adding a wholesale B2B channel to a dedicated direct-to-consumer (DTC) offering, or vice versa.
Sportswear clothing brand LSKD’s journey began primarily focused on wholesale and marketplaces and quickly diversified to a purely DTC strategy, leading to significant growth. Social selling is also an important growth consideration for retailers, with Facebook, YouTube and Instagram among the top channels where consumers are discovering new products.
James Johnson, director of technology services & enterprise (APAC) at Shopify.
And, for businesses with niche products or for those that have already captured a significant local customer base, expanding into new markets domestically or internationally could be the easiest way to sustain growth. More than one-fifth (28 per cent) of surveyed businesses are expanding into new markets, and it’s easy to see why. Australian swimwear brand Tigerlily is pursuing growth this way, as Travis Wright, CEO, states, “Our biggest opportunity right now is in the northern hemisphere. We launched our US website last year as a strategy to stabilise revenue, year-round. Market diversification is just as important as channel diversification.”
Expanding into new markets has the potential to increase brand visibility and provide resilience against local market downturns, as it reduces dependency on a single market. In addition, businesses with products that are subject to seasonal fluctuations, selling into countries with contrasting seasonal patterns can provide a means to achieve revenue stability, all year around.
While the uncertainty and turbulence of the last few years and months has put many business owners on edge, it’s important that they continue to pursue customer growth alongside their efforts to reduce expenditure and improve efficiency. There’s no one right answer for sustainable growth, so how can retailers pick which road to venture?
As with almost all approaches when it comes to running a business, it’s important to consider the customer first. Is it that you have a dedicated customer base with disposable income, that are ready to spend more? Or is it time to branch out into entirely new personas which, while it may seem a heavier lift, has the potential to pay dividends in the long run? Or, despite all of that, is the Australian market saturated, meaning it’s time to ride the wave to international expansion? All of these are questions any business and retailer leader needs to ask themselves as they consider a brand expansion strategy.
Overall, in times of challenge, being prepared to adapt and evolve is crucial to maintaining forward momentum. While one road to expansion and diversification seems right for now, it may change in a matter of days, weeks or months. With perseverance and innovation, businesses can open doors to new opportunities and success, regardless of what the economy is doing.
James Johnson is director, technology services & enterprise (APAC) at Shopify
Sponsored by Shopify
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