Traditional stores fight back online

Traditional bricks and mortar retailers, which for a long time refused to believe the hype about online sales, have finally made an inroad into the crucial revenue channel by winning back customers from pure-play operators that have dominated the area.

Traditional bricks and mortar retailers, which for a long time refused to believe the hype about online sales, have finally made an inroad into the crucial revenue channel by winning back customers from pure-play operators that have dominated the area.

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.

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