Advisory services recommend on-line retail trading facilities
It’s no wonder advisory firms are urging retailers, especially those clients in the process of turnaround or restructuring, to consider inaugurating on-line trading if they haven’t, or updating this facility if they have.
A Morgan Stanley consumer survey indicates Australia’s retailers are poised to benefit enormously from on-line shopping expected to top $27bn by 2019.
Statistics show shoppers are becoming increasingly comfortable purchasing by way of mobile phones and the internet. Retailers who have invested heavily in the few years in on-line trading, are rapidly getting their money back if they haven’t got in back already.
Clearly, all indications are that whatever retailing business you run - given that its nature and structure can accommodate on-line trading - then it’s a facility you should provide if you want to succeed.
Accommodation the key
Some retailers have customers whose annual spending in on-line stores since 2014 has been increasing from 15% to more than 35%.
However, Macks Advisory advises retailers that while in many instances on-line sales will continue to grow as a proportion of total sales, the challenge always exists for business owners to ensure on-line facilities and capacities can be accommodated by, and will in fact complement, existing bricks and mortar.
Furthermore, just as the success of a conventional store depends on constant revision and where appropriate, updating, so it is that successful website trading depends on constant evolution.
The two aspects of the business must be synchronised. Store environment must match the electronic environment, so that it’s important for retailers to get expert advice about this.
It’s not all about price
Morgan Stanley surveys also show that in large part on-line sites are being used by visitors as a research tool before coming into stores.
And it’s not all about price.
Since 2014 the number of survey respondents who say they shop on line because it’s cheaper has been dropping, while on-line sales have been increasing.
It’s the ease of on-line shopping that customers like. Manifestation of this is Australia Post’s recent announcement of its huge turnaround in financial fortunes off the back of a booming parcels business attributed largely to on-line sales.
We don’t have numbers for smaller retailers but there’s nothing to suggest comparable proportional figures for well managed lesser on-line retailers wouldn’t coincide with those of big players like Myer, Kmart, Harvey Norman and JB Hi-Fi.
Where the growth occurred
According to Morgan Stanley analysts Thomas Kierath and Monique Rooney, Myer total on-line sales increased 100% for the 2014 financial year. Thereafter they expected 12% of consumers would buy cosmetics and handbags on-line, compared with the then corresponding rates of 4% and 7% respectively.
The analysts said rival David Jones should expect only a 0.4% increase in on-line spending over the next 12months with planned purchases of large appliances down from 6% to 1%.
However, among electronics retailers, JB Hi-Fi was forecast to extend its on-line sales lead from 15% to 35% of customers.
Among interesting developments in on-line marketing is the growth of food delivery sites as a challenge to the domination of Coles and Woolworths.
In some instances a combination of direct relationships with suppliers and a sophisticated on-line sales model enable organisations to sell a sample basket of about 35 popular household groceries at less than half identical sample baskets from either of the supermarket giants.
By 2019 it’s expected that of all retail sales from all of Australia’s retail businesses, somewhere between 8% and 9% will be made on-line – and what that means is it’s a facility a serious retailer should seriously consider providing.
