Past neglect costing online sales

Local retail chains are playing catch-up with their online presence.

Australian bricks and mortar retail chains may have their backs against the wall in the face of cheaper international online offerings, but their general lack of an online presence over the last decade is also to blame.

Online retail sales as a percentage of revenue for the US and UK are significantly higher than in Australia and New Zealand. Indeed, major retailers in these countries, such as JC Penney, now generate as much as 8 per cent of their revenue from online sales.

According to research by PricewaterhouseCoopers (recently rebranded PwC), a key difference is that retailers in major overseas markets have a strong online customer value proposition and have invested substantially in their technology and supply chains.

“Many of the overseas retailers now offer an integrated multi-channel experience that allows customers to seamlessly shop across all channels anytime, anywhere, and on any device,” PwC said.

“Such convergence is leading to multiple channels being used simultaneously. It is no longer one or the other.”

In Australia, PwC expects online shopping expenditure to reach $13.6 billion, a growth of 13 per cent from the $12 billion expenditure in 2010. In contrast to the 8 per cent of revenue enjoyed by some retailers in the US and UK, this equates to 5.5 per cent of total retail sales.

Australian retailers are particularly at risk of losing sales to overseas rivals, with price and access to a broader product range incentivising more consumers to shop internationally. However, PwC found that less than 1 per cent shopped overseas to avoid GST.

PwC estimates that $6 billion will be spent by Australians on overseas websites this year, equating to 44 per cent of total online purchases for 2011 and up a significant 25 per cent over 2010.

Over the next 12 months, 86 per cent of online shoppers surveyed indicated that they would increase or at least maintain their current level of expenditure. For local retailers, PwC says the importance of channel integration is further emphasised when shoppers demand the ability to click and collect and transact in-store via mobile devices and kiosks.

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