Retailers fight off internationals: local multi-channel spend strengthens

by Marketing ON 7 March 2013

Australian retailers have hit back against large international players, outpacing the growth in online sales shown by overseas giants, recent figures show.

Domestic online retail has shown near record growth in recent months, with sales increasing by 28% year on year in January, compared to 25% year on year for international operators, NAB’s Online Retail Sales Index found.

Domestic retailers accounted for 73% of the $13 billion spent online in the year up to January, with the adoption of multi-channel strategies, live inventory management techniques and enhanced stock turnover credited for their strong performance.

Online retail sales rose to an estimated $13 billion across the year and are now equivalent to 5.8% of traditional bricks-and-mortar sales when food retailing is excluded.

Overall, growth for January was unseasonably strong at 27%. Even though January is typically a weaker month for the online sector, 2013 experienced a strong post-Christmas period, NAB group chief economist Alan Oster says.

“Online remains much stronger than traditional retail, up just 0.4% year on year in December 2012, on a non-seasonally adjusted basis,” Oster points out.

Trends in the individual sub-sectors of online retailing remain divergent, with ‘Household Goods & Electronics’ showing above average growth over the past three months, after a long period of underperformance.

‘Auctions, Departments & Fashion’ remained the largest sector, grossing almost half (48%) of online sales. ‘Recreation, Toys and Games’ accounted for 20% of spend, while ‘Groceries, Liquor & Specialised Food’ claimed 13%.

Those aged in their 30s and 40s remain the key demographic for online spending, while Western Australia’s share of spending continues to rise, as the state outpaces the rest of the nation in growth terms.

“It’s clear that our domestic retailers are now fully comprehending the potential of the online retail channel,” the report concludes.

Infographic: The ups and downs of retail in 2012

by Marketing ON 20 December 2012

Earlier in the year, we tracked the ups and downs of online retail against ‘traditional’ retail in the infographic below.

2012 was a year of fluctuations for online retail, with growth peaking near 30% in February then dropping to below 20% in April, before recovering to 25% in July. The last recorded data from NAB’s Online Retail Sales Index, collected in October (after this graphic was published), growth was steady at 26%.

In contrast offline retail sales growth languished at sub-5% levels all year, with some months recording decreases. In November, the more recent run of ABS retail trade figures, there was no change in sales month on month.

While much has been made of the threat online retail, in particular overseas operators, poses to traditional retailers, the vast majority of sales (94.7% in July) still goes through brick-and-mortar outlets. And international retailers only claimed 28% of online sales, as local online players dominate the space. After a spurt in mid 2011, growth for international retailers dropped below that of local operators, where it remained for much of 2012.

Online shoppers spent the lion’s share of their outlay on auction sites, department stores and fashion retailers throughout the year. In July, toys and media retailers were the second largest segment of the online markets, while household goods and electronics was the third largest.

Tellingly, as of earlier in the year, if the top 15 online retailers in Australia were a single entity, they’d be bigger than Myer and David Jones and almost on par with department store market leader Big W, according to analysis from data analytics firm Quantium.

Click image to embiggen.

Online sales gallop towards Christmas after mid-year lull

by Marketing ON 30 November 2012

The rate of growth in online sales strengthened over the last six months, to log 26% year-on-year growth in October, according to NAB’s Online Retail Sales Index.

Australians spent $12.3 billion online for the year to October, which accounted for around 5.6% of total retail spend, showing the vast majority of shopping is still conducted offline.

However, the growth rate of online retail spend once again far outweighed that recorded by traditional retail which grew a paltry 2.2% in September (3.6% when food retailing is included), according to the most recent ABS retail trade figures.

NAB’s most recent figures represent somewhat of a rebound for online sales, following a slowdown in the early part of 2012. The rebound was driven by domestic players, group chief economist for NAB, Alan Oyster says.

“Domestic retailers have been the dominant players in the online space, accounting for almost three-quarters of sales in the year to October.”

Domestic sales increased by 28% year on year for the month, while international sales increased by 22% year on year.

Around half of all online purchases were made through auction, department store, fashion, cosmetic or variety store retailers. ‘Recreation, toys, games, hobbies, music, movies and books’ was the second largest of the study’s broad categories, accounting for 21% of sales. ‘Home, furniture, appliances and electronics’ followed with 19% of sales while ‘groceries, liquor and specialised food’ brought up the rear with 13% of sales.

In October, sales growth for food and beverages and the department store and fashion category jumped, growth in toys and media slowed, and the household goods and electronics declined.

Director at research firm Quantium, Tony Davis, predicts retailers will innovate as the online landscapes changes. One sector which continues to go through shifts is the group buying market. “The group buying sector of online continues to see rapid decline, but we are bound to see other new online formats emerge,” Davis says.

Quantium pieces together the online retail figures by extrapolating the spend of NAB credit card holders to the overall population.

Those aged in their 30s and 40s remain the key demographic for online spending, with the under 30s age group lagging behind on a per capita basis.

Offline retail slumps, online localisation hailed as its potential saviour

by Marketing ON 30 May 2012

The next wave of retailing is localisation and tighter tailoring of range to individual communities, according to CEO of digital agency Salmat, Grant Harrod.

Harrod’s comments come as figures for April’s retail trade emerge, showing a decline among traditional retailers of 0.2% month on month and a slowdown in the growth of online trade, albeit to a still considerable level of growth.

While the figures point to a continuing reticence to spend and the impact of the structural shift on offline retail, Harrod told members of the press at an event in Sydney that the ability of digital communication and ecommerce to provide localised offers could be the saviour of bricks-and-mortar operations.

“The next wave of retailing will be around this notion of localisation and re-establishment back with community that can be achieved using an omnichannel approach,” Harrod said.

Using digital methods to maintain a relationship with customers, target deals based on interests, buying behaviour and location, offer dynamic pricing to reward loyalty and select ranging to suit individual communities of shoppers could be a ‘fight back strategy’ for bricks-and-mortar, Harrod explained.

Women’s fitness and leisurewear brand Lorna Jane has embarked on the beginning of a localised strategy, by maintaining Facebook pages for each of its 131 retail stores. The intent is to build a community around each local store in order to offer customers as close to what they want as possible.

Sharing the brand’s experience with social media, its digital strategist Sam Zivot said online sales were now equivalent to the sales of 20 of its bricks-and-mortar stores, with 10% of conversions coming from Facebook. The brand has experienced a 300% increase in web traffic and 400% lift in online sales over the past 18 months, and intends to expand into the US with a localised website and distribution centre in the coming months.

While today’s ABS figures show a 0.2% decline on March, April’s spend represents a 2.4% year-on-year increase. However, this increase is being driven by food retailing, up 3.6% year on year, cafes, restaurants and takeaway, up 8% and other retailing, up 2.8%. Discretionary spend sectors of clothing and footwear, department stores and household goods dropped by 1.5%, 3.1% and 0.8% year on year respectively.

NAB’s Online Retail Sales Index shows that online sales grew by 16% year on year in April, compounding the pressure placed on traditional retailers not executing an omni-channel strategy.