Traditional stores fight back online
The latest National Australia Bank retail sales survey shows many bricks and mortar shops are successfully evolving into "bricks-and-clicks" operators, offering customers offline and online shopping.
The survey reveals that in the 12 months to July, pure-play retailers, including eBay and Amazon, controlled 70 per cent of online retail sales in Australia, down from 73 per cent at the start of 2010.
It also showed that despite a slow start to the year, Australia's online spending rose to $14.1 billion in the year to July, equivalent to 6.3 per cent of traditional retail sales.
The push-back by traditional retailers, in which companies such as David Jones, Myer, Woolworths and Harvey Norman have poured millions of dollars into an omni-channel strategy, is working.
Bricks-and-clicks retailers generally recorded stronger growth rates than the pure-plays in 2011 and 2012, NAB said.
NAB chief economist Alan Oster said the dynamics between pure-play and bricks-and-clicks were changing. Pure-play operators still dominated but were losing market share and facing strong inroads from traditional retailers that had invested in their online shops.
"This decline demonstrates that retailers appreciate the value of a multi-channel business model and are succeeding to grow online activity. We think the previous dominance in pure-play retail may continue to slowly diminish," he said.
The survey also found the market share of pure-play sites and push back from traditional stores varied according to the category.
Within fashion, pure-play sites had 57.2 per cent of the Australian market, in homewares and appliances 39.9 per cent, in groceries and liquor 37.8 per cent but in department and variety stores sales 94.6 per cent.
Frequently Asked Questions about this Article…
The National Australia Bank (NAB) retail sales survey found that traditional bricks-and-mortar retailers are successfully evolving into 'bricks-and-clicks' operators, winning back customers from pure-play online operators by offering both offline and online shopping.
The survey showed Australia's online spending rose to $14.1 billion in the year to July, equivalent to 6.3% of traditional retail sales.
The article says companies such as David Jones, Myer, Woolworths and Harvey Norman have poured millions of dollars into omni-channel (bricks-and-clicks) strategies to strengthen their online and offline presence.
Yes — NAB reported that bricks-and-clicks retailers generally recorded stronger growth rates than pure-play operators in 2011 and 2012, indicating traditional retailers with online offerings are gaining traction.
Alan Oster said pure-play operators still dominated online retail but were losing market share as traditional retailers invested in online shops. He noted retailers appreciate the value of a multi-channel business model and are succeeding in growing online activity.
According to the survey, pure-play sites held 57.2% of the fashion market, 39.9% in homewares and appliances, 37.8% in groceries and liquor, and 94.6% in department and variety store online sales in Australia.
'Bricks-and-clicks' refers to retailers that operate both physical stores and online channels. For investors, the model matters because the NAB survey shows multi-channel retailers are reclaiming online sales from pure-play operators, which can affect market share and growth prospects for retail stocks.
Investors should monitor shifts in online market share between pure-plays and bricks-and-clicks, growth in overall online spending (notably the $14.1 billion figure and 6.3% share), retailer investments in omni-channel strategies, and category-specific dynamics such as fashion and homewares where pure-play penetration differs.
Call 1300 880 160
Start a chat
Schedule a call
