Stores gain traction online

Once ignored in favour of glitzy offshore websites with their steep discounts, Australia's traditional bricks-and-mortar retailers are staging a fightback for the hearts, minds and wallets of local consumers to win a greater slice of online sales.

Once ignored in favour of glitzy offshore websites with their steep discounts, Australia's traditional bricks-and-mortar retailers are staging a fightback for the hearts, minds and wallets of local consumers to win a greater slice of online sales.

Although late to the party in terms of setting up credible and properly supported websites, the nation's retailers have recently invested heavily in their online sites, are now gaining traction online and curtailing channel-share losses to the pure-play operators, according to a new report by Commonwealth Bank.

The CBA's latest report on online sales data argues that this should give local retailers more comfort that the overseas trend of traditional bricks-and-mortar retailers eventually dominating the online channel is starting to occur in Australia.

"It's been evident in the data for the last six months and it's a trend that could continue," CBA analyst Andrew McLennan said.

"Not everyone is comfortable buying overseas and dealing with the risks etc so there has always been an interest to be able to consume with local retailers," he said.

"So in the fullness of time, once the traditional retailers develop a decent online offer, they work out their relative pricing and they then reallocate their advertising spend ... they already have the retail distributions point nationally, scale in deliveries and returns and all the brands.

"And internationally the big department stores end up doing pretty well in terms of regaining the share that was otherwise lost to the online channel from the first movers."

Over the past few years leading retailers such as Myer, David Jones, JB Hi-Fi, Woolworths and Coles have poured hundreds of millions of dollars into their sites, IT and back-office support.

The sector's collective regained market share is at the expense of online only stores, or pure-play operators, who can't match the real world infrastructure and brand strength of traditional bricks-and-mortar retailers.

"After a year of enormous growth in 2011, the pure-play online retail sales growth (23 per cent year to February 2013) continues to converge with total online sales growth (16 per cent)," CBA's report said. "This was expected to lead to consolidation of pure-play online retailers amongst themselves and possibly by traditional retailers."

Meanwhile, the latest analysis of the online spending activities of 2.4 million of CBA's customers through the bank's credit and debit card facilities showed growth in total online retail spending remained strong - up 16 per cent for the year to February 2013 to $15 billion.

This level of online spending represents 5.7 per cent of total retail sales.

The figures match recent findings by NAB. Its March online sales report said online sales growth was 15 per cent for the year to March.

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