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Australian Retail continues to fall behind online in 2013


Category: Innovation News

A joint study by NetSuite and the Australian Retail Association reveals Australian retailers are unprepared to take advantage of the online retail sector, with only 30 percent of retail businesses transacting online.

NetSuite, an industry provider of cloud-based financials and omni channel commerce suites, and the Australian Retailers Association (ARA), have joined forces to produce a report that reveals online is the channel that will determine the future success of Australian retailers.

Online retail spend is expected to reach more than $18 billion in 2013 and are forecasted to grow 39 percent to $25 billion by 2015 – including purchases by Australian consumers on local and overseas websites. The study of 219 Australian retail managers by Frost & Sullivan, entitled ‘Making the Web the Centrepiece of a Retail Organisation‘, was carried out in July 2013 to gain a better understanding of the industry ahead of the peak trading period as well as to find out what strategies retailers have in place to take full advantage of the online space.

While the future might look promising, the study shows that almost 50 percent of Australian retailers believe that in-store trading conditions in 2013 are worse than in the first half of 2012, while only 35 percent view conditions as better. With overall retail sales in Australia expected to continue to grow by only two percent in 2013, smaller chains in particular are finding retail conditions particularly tough.

Mark Troselj, Managing Director of APAC and Japan for NetSuite, said the thought process behind the creation of the survey and subsequent support was to emphasise the opportunity to Australian retailers, as well as the inherent risks involved with continuing to bury their heads in the sand.

“I don’t believe the Australian retail community is yet to wake up to the scale of the online opportunity, as well as the implied risks of ignoring it,” Troselj said in a recent interview with Power Retail. “What we’re trying to show is that it isn’t just some e-commerce software company talking up the benefits of online; here is an independent, century-old industry body that’s advocating the same thing.”

While more than 50 percent of Australia’s 77,000 retail businesses have a website, the report shows only one-third currently transacts online. In addition, an estimated 33-50 percent of all online expenditures by Australian shoppers are going to overseas sites.

“A number of factors have impacted retail sales growth in Australia, including a greater propensity for consumers to save rather than spend, a challenging job market and rising household costs,” said Mark Dougan, Managing Director for Australia and New Zealand for Frost & Sullivan. “The market has also been impacted by price deflation, partially caused by the growth in online shopping and by a growing number of overseas retailers targeting the Australian market, offering a greater variety and choice of goods at lower costs. This is coupled with the lack of consumer foot traffic into brick and mortar stores, as well as the high operating costs retailers must absorb.”

These results show that, yes, there are a large number of sales going to offshore retailers, but on the other hand there is still a large volume of local retailers that are yet to even give consumers an opportunity to purchase with them in an online channel.

“So much of what we buy has become commodity-driven,” Troselj said. “If a customer can go to a website where it’s simple and easy to purchase a product they want and it gets delivered in 48 or so hours, as opposed to walking into a store and paying sometimes double the amount on the same item, they’ll do it every day of the week.

“We’re here to tell retailers that creating this kind of an offering for your customers doesn’t have to be difficult or expensive, so don’t sit there and wonder why your business is going under – come and talk with a SaaS-based provider instead.”

Andy Lloyd, General Manager of Commerce Products at NetSuite, believes that part of the issue – and the major concern for retailers – is the pace at which the industry is moving.

“In a rapidly evolving industry, if you’re not staying on top of the latest technology then you’re going to fall behind,” Lloyd says. “If you go out and buy a license-based solution, you’ll install it and it may take you up to two years to truly get it running. By the time you’re done you’re already behind. Ideally, online retailers need to be on a cloud-based solution that is evolving at least as quickly as the industry is.”

Source: Power Retail

Photo: Inside Retail

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