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Online sales are growing, but not as fast as retailers expect

The retail sales data underlying the ninth edition of CommBank’s Retail Insights report points to the continued shift in shopping behaviour as many consumers expect to increase their online purchasing. The report is based on a quantitative survey of 580 small, medium and large retailers and 1505 consumers across Australia conducted in July 2019.

Online sales up, foot traffic mixed

Online sales as a proportion of total sales at multi-channel retailers grew by 7 per cent over the past 12 months to account for 31 per cent of total sales volumes. This broadly tallies with consumers’ reports that 33 per cent of their purchases are made online. From here, almost half of all shoppers expect their online purchases to increase, with the most significant uplift expected among the Baby Boomer and Pre-Boomer generations, albeit from a lower base.

The number of retailers reporting an increase in foot traffic in the year to date continues to significantly outweigh those who have experienced a drop in shoppers visiting their stores. However, there is also a growing number of retailers with falling foot traffic, suggesting a rebalancing in light of the growth in online sales volumes.

Just over a third of retailers are also planning to increase the number of stores they operate in the year ahead, particularly among the largest retailers by turnover and those in the food and liquor sector.

Clothing and footwear category stands out

Clothing and footwear retailers appear to be particularly effective at adapting to changing consumer behaviour. They are among the most confident about both revenue growth and improving business conditions in the coming 12-month period as they take active steps to optimise their sales channels.

Since January 2018, online sales in the clothing and footwear category have almost doubled as a proportion of multi-channel retailers’ overall sales, rising from 23 per cent to 40 per cent over that period. This is also reflected in a drop in foot traffic, and many clothing and footwear retailers are steadily downsizing their physical presence as their online presence grows.

Retailers’ outlook for online sales outpaces reality

Despite an uplift in online sales as a proportion of multi-channels retailers’ overall sales in the past six months, it has hovered at around 30 per cent since 2017. Relatively flat online sales volumes have defied retailers’ perennial forecasts for more significant growth, suggesting that there may be other factors constraining online sales performance.

One factor that plays an increasingly pivotal role in shaping consumer perceptions of their online shopping experience is the delivery and pick-up services offered by retailers. The focus of the 2019 CommBank Retail Insights report indicates that online shoppers, particularly younger generations, see room for improvement of delivery services and the need for more innovative solutions to keep pace with shoppers’ expectations. To ensure their online success and continued sales growth, it is critical that retailers get the ‘last mile’ right.

Read the full report at commbank.com.au/retailinsights.

All statistics and references to consumers and retailers in this article are based on the responses to the surveys conducted for the 2019 CommBank Retail Insights 9report, unless otherwise stated.

Things you should know: This article is based on responses to the survey conducted for the CommBank Retail Insights 9 report. This report is published solely for information purposes. As this report has been prepared without considering your objectives, financial situation or needs, you should, before acting on the information in this report, consider its appropriateness to your circumstances and if necessary seek the appropriate professional advice.

The information in this report is based on a survey of 580 decision-makers from small, medium and large retailers across Australia, with turnover ranging from less than $1 million to over $500 million, as well as 1505 consumers, by ACA Research on behalf of the Commonwealth Bank. Consumer data has been weighted to ensure the results are nationally representative, more information about the survey participants can be found in the full report at commbank.com.au/retailinsights.

Any opinions, views of contributors, conclusions or recommendations are reasonably held or made, based on the information available at the time of this report’s compilation, but no representation or warranty, either expressed or implied, is made or provided as to the accuracy, reliability or completeness of any statement made in this report. Commonwealth Bank of Australia ABN 48 123 123 124, ASFL and Australian credit licence 234945.

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