Professional services firm, PricewaterhouseCoopers (PwC), and analyst firm, Frost and Sullivan, are encouraging the retail industry to take on a ‘consumer adaptive approach’ as online shopping continues steady growth.
According to the firms’ Australian and New Zealand Online Shopping report, which is a survey of 1000 Australian consumers between the ages of 15 and 65, 53 per cent are now buying online. While the figures may be restricted to a minute spread of participants, it does provide a range of indicators for analysis.
For example, the report predicts that online shopping in Australia will amount to $16bn in 2012. This figure is expected to grow to $26.9 bn by 2016 at a compound annual rate of 14.1 per cent.
‘Lower prices’ is the key reason for online shopping, with 55 per cent of respondents stating that this is the cause of their preference. The convenience associated with the ‘queue/crowd-free model’ ties with more ‘comprehensive product range’ at 15 per cent, the former having fallen five per cent since 2011, and latter growing slightly.
The prominence of mobility and the booming smartphone market have grown purchases on mobile devices, with 26 per cent of total online purchases completed in this way.
As a result, PwC global retail and consumer advisory leader, Stuart Harker, encourages Australian retailers to reset their business models as a response to the shifting 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,” he said. “The days of growing by simply opening more stores are long gone.”
PwC national digital leader, John Riccio, said that, through a consumer adaptive approach, the first step is re-evaluating the role and size of the store.
“The store will stay but it will continue to change, with retailers having to consider reducing store networks, cutting the size of in-store displays and subletting to other businesses, and in some cases converting under-performing stores into fulfilment centre for online channels,” he said.
Another measure is an investment in understanding the purchasing intent of customers, and relay customers’ online preferences, such as price, into the store. Riccio also emphasises integration, stating that the store is no longer a physical concept. Alternative means of sale must be adopted, such as a mobile app or social networking, for example.
“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,” Riccio said.