More competition from online shopping

Simon Johanson
February 18, 2015
The Age
Traditional bricks and mortar retailers will face further pressure from web-based competitors if overseas experience is any guide, Savills Australia says.
The online retailing juggernaut was still relatively small in Australia, snatching less than 7 per cent of traditional retail sales compared with double the volume in Britain (13.5 per cent) and 70 per cent more in the United States (11.6 per cent), Savills researcher Glenn Lampard said.
“Online spending has slowed from its peak of circa 30 per cent annual growth but it is still growing strongly and, in time, we expect to see that growth mirror the overseas experience and that is going to impact [on] traditional retailers without a web presence,” Mr Lampard said.
While most Australian retailers have internet access, less than half have an online presence despite customers going online.
The NAB’s online retail sales index shows international sales still account for nearly 25 per cent of Australians’ online spending.
However, the Australian dollar’s slump against the US greenback was expected to strengthen spending on local sites.
Savills retail director Michael Di Carlo said smaller retailers struggled to follow larger department stores, which were offering multi-channel options (store and web) to customers.
At the same time, their web-based competitors were looking to take a high street shop presence.
“That challenge will become even more difficult when the larger retailers invest in the latest in-store technology, while pure plays [online-only retailers] move into or increase their bricks and mortar presence via pop-up and/or short-term lease stores,” Mr Di Carlo said.
Other factors likely to confront traditional retailers were:
The roll-out of high-speed networks through the NBN and the increased speed it offered shoppers.
A shift to food and beverage stores, likely to accelerate with the growth of apartment living with cafes, restaurants and takeaway food outlets nearly doubling their annual share of the total retail spend over the past year.
Location would also become increasingly important for some retailers.
“If location was important prior to the internet, it is now critical, especially for those retailers who struggle to compete with better resourced, internet-savvy competitors,” Mr Di Carlo s