Over half of Australians over the age of 15 have made an online purchase, according to new research, with figures also pointing toward the likelihood that online spend will grow a further 17 percent this year alone.
Online shopping is causing significant structural changes in the retail industry with 53 percent of local consumers aged over 15 now buying online, according to new research by PricewaterhouseCoopers (PwC) and Frost & Sullivan.
The Australian and New Zealand Online Shopping report found the number of dollars spent online by Aussies will increase by 17.9 percent to $16 billion in 2012. A total of $26.9 billion is expected to be spent online by 2016.
Offshore online shopping has increased by 20 percent in the last year to $7.2 billion, now representing 45 percent of Australia’s total online shopping spend.
As online shopping slowly becomes the mainstream, local retailers are under pressure to reshapre their business models to fit with the new environment.
“Like retailers in the US and UK are doing, 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,” PwC Global Retail & Consumer advisory leader, Stuart Harker said.
Some 55 percent of consumers are now buying online due to the availability of lower prices, up from 50 percent 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,” Harker added.
Integration the key
In addition to a focus on price, retail businesses also need to be structured to be able to meet the evolving needs of increasingly tech savvy consumers.
“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,” PwC National Digital Leader John Riccio said.
Over a quarter of online purchases are now made on mobile devices, compared with 21 percent last year, with mobile technology expected to drive continued growth in online shopping.
The most popular online purchases are still electrical items, clothing, footwear and personal accessories. The biggest jump have been in food and groceries, which are now purchased online by 23 percent of shoppers, compared with 17 percent last year.
“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.