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| Australia's online boom |
Posted Date: 23/07/2012
By Inside Retail
More than one in two Australian shoppers aged over 15 now shop online, causing major structural change to Australia's retail industry.
New research released today by PwC and Frost & Sullivan shows that in 2012, online shopping in Australia will increase 17.9 per cent to $16 billion, and is predicted to grow to $26.9 billion by 2016 at a compound annual growth rate of 14.1 per cent.
Significantly, the report excludes spending on such items as travel and accommodation, event ticketing, financial services products and media downloads, such as Apple's iTunes store, so the true figure of Australian online spending is arguably far higher.
The Australian and New Zealand Online Shopping report concluded that offshore online shopping has increased by 20 per cent in the last year to $7.2 billion, now representing 45 per cent of Australia’s total online shopping spend.
According to PwC Global Retail & Consumer Advisory Leader, Stuart Harker, online shopping is "now mainstream" and Australian retailers are under significant pressure to reset their business models in response to the new retail environment.
“Like retailers in the US and UK, Australian retailers must fundamentally rethink their strategy, particularly in relation to their real estate and store portfolio. The days of growing by simply opening more stores are long gone,” said Harker.
He says there has been a shift in the motivation for consumers to buy online, with 55 per cent saying lower prices is the most important reason - up from 50 per cent last year.
“With online shopping becoming increasingly all about price, and less about convenience and range, retailers are under greater pressure than ever to give consumers a compelling reason to shop with them,” said Harker.
Over a quarter (26 per cent) of online purchases are now made on mobile devices, compared with 21 per cent last year, and this is expected to drive continued growth in online shopping. Mobile commerce is growing across age groups as well. In 2011, 18-25 year olds were the most likely to shop using their phones, but this year it’s 26-35 year olds.
The most popular online purchases are still electrical items (62 per cent), and clothing, footwear and personal accessories (61 per cent). The category to record the biggest jump has been food and groceries, now purchased online by 23 per cent of shoppers, compared with 17 per cent last year.
The report also found growth in online shopping is being driven by evolving digital tools and increasingly sophisticated and connected consumers, who have high expectations of the retail experience.
PwC National Digital Leader, John Riccio, said retail businesses now need to be structured so they can adapt to the evolving needs of increasingly tech savvy consumers, what we call a ‘consumer adaptive approach’.
“Adapting to the new retail environment means firstly re-evaluating the role and size of the store. These days for many retailers a number one ranking on Google is as important as a flagship store on Melbourne’s Bourke St or Sydney’s Pitt St Mall.
“The store will stay but it will continue to change, with retailers having to consider reducing store networks, cutting the size of in-store displays and subletting to other businesses, and in some cases converting under-performing stores into fulfilment centres for online channels.
“Retailers must also invest in better understanding the purchasing intent of their customers. This means recognising the role of price, online service and personalising offers based on an individual customer’s interests and broader ecosystem rather than purely buying history.
“Retailers need to be integrated across all their channels. No longer is the store the physical door that customers enter and leave from. Now your door is just as likely to be an e-commerce site, a mobile app, an interactive billboard, through a friend’s Facebook page or a video on YouTube.
“The retail industry is at a critical juncture and retail businesses that continue to operate in a traditional retail model run the risk of disruption and will not take full advantage of the opportunity that exists in this rapidly changing digital era,” said Riccio.
The survey is based on a comprehensive survey of 1000 Australian consumers between the ages of 15 and 65 who have shopped online in the past 12 months. The definition of online shopping in this report is online purchasing of physical merchandise such as clothes books, and electronic items. This covers the same merchandise categories as used in the retail sales statistics published by the Australian Bureau of Statistics, and therefore online sales can be directly compared with total retail sales.
The study therefore excludes online purchasing of services such as travel and accommodation, event ticketing, financial services products and media downloads, as these products are not included in retail sales statistics. |
Tuesday, July 31, 2012 by Simon
The comments about offshore shopping resonate strongly with us and are spot on. Our websites provide cashback to shoppers buying online, and the number one query we get at both DealSave.com.au and StartHere.com.au is about when we're going to add more overseas merchants to our offering. It's definitely a clear trend. The positive for us is that O/S merchants are extremely receptive to the cashback concept and already support it, so we will be adding offshore merchants pretty shortly. But as a local merchant I'd definitely work hard to differentiate on service and fulfillment.
Wednesday, July 25, 2012 by Iscariot
@ Jason - agree with you and clearly Kevin didn't read the article and/or shows he just doesn't "get it".
@ Kevin - your comments come across as the ravings of a man over 50 (grumpy old man/men?), bucking against the changing world and blaming various aspects of change as vehicles for societal destruction, instead of embracing them as possible tools of enhancement. I'm sure people were making similar arguments about the impact of TV when you were just a boy. The idea you would weed out staff because they shop online is laughable and the fact you are still trading with this mentality astounds me. Surest way to accelerate your shelving due to antiquated attitude and operation. Service will always be king...using arbitrary definitions to weed out your employees based on your personal gripes is not a smart way to ensure your success, only grind your axe.
Wednesday, July 25, 2012 by Clunking Fist
Kev Cox, you sound like my dad: "ban the internet becauses it destroys jobs, ban the internet because the crims are stealing your identity" (he sees this stuff on tv and in the newspapers).
"i'm with you dad: ban windows because crims are always using them to enter your home, ban cars 'cos they're always killing people, ban aeroplanes cos they give you deep vein thrombosothing"
Mate, you just can't hold back the future.
Tuesday, July 24, 2012 by Jason Goldsmith
Working in the space between Retail and Online and focused on the integration from ERP to POS and Online, I find that information provided above is highly significant however note that there is a lack of available information for Clicks and Mortar businesses. This is possibly due to the inability of most (POS, Office and ERP) systems to operate from a single database.
If the Business owner were able to track the customer/user and their movements in store, the reluctance of SME Retailers would be alleviated. In store redeemable, the experience and the upsell are all valid reasons for driving your customers in store. Unfortunately, there is a real lack of cross discipline knowledge and rarely is it used to create a product that matches the Retailers real needs. It does; however, do a good job of justifying the developer’s ability.
Key performance indicators should be in store, with the advantage of the experience, not just an aesthetically pleasing online store.
As for the comments above...did they even read the article?
Tuesday, July 24, 2012 by kevin cox
btw being against technology and young, there are a few out there, does not make you a dreg. some times it is a life choice. mostly the parents choice but some people just dont like the net.
Tuesday, July 24, 2012 by kevin cox
hi pat, as far as becoming irrelevant because of a low tech business model, my business uses tech as a tool but never as a replacement for service and advice. in a high tech world where everything is available at the push of a button the person who can use his hands and communicate face to face becomes the person of value. my point is also that if shops continue to go down the tubes who will hire those young people and where will they get the money to spend online? people with dreams and stores built cities not computer generated sales. the us military has found that soldiers who pilot UAV's have less compassion than the soldier on the ground. they new this in the vietnam conflict as well. the more disengaged our young people become the less they will care about each other and who will take care of us when we are elderly. this seems off topic but it can all start in the work place. just like a good work ethic is instilled and not just simply a mutation at birth. we need to let people know about the connection between haveing a job and a companies ability to keep your job availble.
Tuesday, July 24, 2012 by Pat
Kevin, I don't think you're going to have too many young applicants for your jobs if they're not wanted because they shop online. And those you get are going to be the dregs if you're selecting people with a criteria that includes being technologically ignorant. Sounds like an excellent recipe for making yourself irrelevant.
Tuesday, July 24, 2012 by arni
All the articles we read are positive about the online model. However ask some of the largest distributors in industries such as toys and sporting goods about the large debts that some of the best known online retailers have run up. Just like any business you must look at your costs and free freight, return it if you don't like it etc.will eventually catch up with you. The game is still running, at least until Amazon set up here!
Tuesday, July 24, 2012 by Jason Goldsmith
Reading the comments, I find it difficult to beblieve they read the article.
Consider a brochure to be Generation 1 of online, eCommerce as a seperate entity to be Gen 2, full integration from POS to Online Gen 3 and what we witnesses this morning at PWC for enterprise integration and customer centric focus is Gen 4. The best offering i have seen so far, is about a Gen 3.5 and I've only seen it because we created it.
Tuesday, July 24, 2012 by kevin
debra, if you dont shop with those young people and make a complaint to senior staff, nothing will change. a bad employee beleives they are good until they are told different. the management are to blame for not putting better training methods into practice. nothing gets better without critique. just look at shows like master chef. how many people are now foodies and how many restaurants are now lifting their game because of people making noise about being dissatisfied?
Tuesday, July 24, 2012 by kevin
i strongly encourage each and every retail employer to ask each person they interview for a job if that candidate shops online. if they do use that as de-selection criteria. as retail is the largest employer of young people if they cant get a job from a bricks and mortor business and the internet is not hiring at this stage, it gives us the power to make a statement and teach the young people the value of face to face interaction. the idea that internet shopping and social media is not harmful to business and society is ludicrous. you only have to turn on the tv for a few minutes of new to see the degradation of our society. there was an ER surgeon who stated that young people no longer have any respect for other human beings. i believe that this is due to the disinfrachisment caused through to much social media and now kids dont even have to interact with shop keepers and other humans to get their products. it all ties together and the fact that these folks will need our issued pay cheques in the future gives us a platform to teach.
Tuesday, July 24, 2012 by Debra
Its just so easy to shop online. My past 5 experiences in stores recently with customer service has been so poor. I prefer not to deal with the untrained staff, staff who do not know how to use a till, staff who do not know the very basics or slow serving staff. Online is just so easy.
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