Small businesses and bricks & mortar retailers are being urged to heed new figures that show Australians will spend over $13.6 billion online this year; with experts advising they focus on engaging customers via multiple channels to build deeper relationships and grab the consumer dollar.
According to PriceWaterhouseCoopers (PwC) and Frost & Sullivan, online spend will jump 13 percent this year, with $6 million of the total amount spent online going to offshore e-tailers – an increase of 25 percent on the $4.8 billion spent last year.
This means that 44 percent of all online retail sales will go offshore in 2011, up from 40 percent in 2010.
“Online shopping, both locally and offshore, is expected to grow at least twice as fast as compared to the total retail market in Australia over the next four years,” Frost & Sullivan Senior Research Manager Phil Harpur said, adding that total online spend will reach $21.7 billion by 2015.
According to PwC’s Global Retail & Consumer Advisory Leader Stuart Harker, Australia’s retail landscape is commencing a structural shift as more consumers start to spend a greater portion of their cash online.
“Large and small retailers alike are facing stronger than ever competition from digital channels, both here and overseas. Lower prices, convenience, greater product range and a growth in mobile devices are all factors fuelling online shopping.”
Over the next 12 months, 86 percent of online shoppers indicated they would increase or at least maintain their current level of online expenditure. The average Australian will spend over $600 online in 2011, compared with $536 last year.
“The tablet device has been one of the key drivers of online retail sales in the last 12 months and will continue to drive sales in the next year as new products are introduced into the market,” Harker said.
International e-tailers constrain local growth
Figures demonstrate that offshore online sales appear to be a contributing factor to the poor growth of local retail sales over the past year. If this year’s offshore online sales of $6 billion were directed to Australian retailers instead, the forecast retail sales growth in Australia for 2011 would be approximately 4.5 percent, as opposed to the current forecast growth rate of only 2 percent.
“The fact Australians can securely purchase a product from half way across the world, and have it delivered to their doorstep quickly and for a very competitive price, highlights the challenges that overseas online shopping presents to local retailers – traditional and online alike,” Harker said.
Challenges and opportunities for Australian retailers
According to PwC National Digital Leader John Riccio the digital channels are changing the way Australians shop – creating both challenges and opportunities for Australian retailers.
“Engaging and retaining customers in the digital era requires a rethink of the role of the store and importantly how retailers engage with their current and target customers.”
Research shows 95 percent of consumers search the web for product information, price comparisons and peer reviews before making a purchase online and over 65 percent of in-store purchases are initiated on the web. This shift in consumer behaviour highlights the importance of having an online offer that is integrated with the in-store experience.
“Because customers can buy anything they want any time on any device, the store becomes more about brand and customer engagement, merchandise and the overall store experience.”
“Retailers that are able to engage customers through multiple channels will build a deeper relationship than through a single traditional store channel,” Riccio added.