Retailers Finally Click to Net Boom

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by Lisa Macnamara | WEEKEND AUSTRALIAN

Top players are gearing up to fight the online-only operators.

The online penny has well and truly dropped for Australian retailers. The belated rush to remain relevant, offer convenience, and play catch-up Lo the old hands off-shore has seen the major players talk up the integration of online platforms as they patch them-selves into the new era of omni-channel retailing.

Myer chief Bernie Brookes summed it up last week when he predicted that the majors, including his own brand, would dominate domestic online retailing within five years, overtaking their online-only rivals. “They’ve all had their time in the sun. In my view that Lime in the sun will come to an end and is coming to an end now,” he told a luncheon in Sydney. Mr Brookes argued that online-only operators do not have the relationships with their brands or their customers to sustain them. And with Australians spending $11.5 billion each year online, there is good reason to try and crush the web-based competition.

Local retailers were also given another reason this week to pursue the “omni-shopper”, with new research from Telstra revealing the majority of local online spend remained onshore. It found almost 90 per cent of consumers surveyed about 800 across the country — bought goods on the net and in-store, with more than a third opting to do so from the same retailer. It is now about offering a blended experience of in-store and online.

The online race has not been lost on David Jones. The department store has fast-tracked the launch of its new web store to the end of October. It is currently overhauling its IT systems and re-furbishing its Sydney warehouse to stock and supply a massive jump in the number of products that will be available online, from 9000 to around 90,000 items. Importantly, the store has star-ted extensive negotiations with international suppliers to ensure it remains competitive on a global basis — recent success includes cosmetics giant Lancome, which has just announced that it is reducing its Australian prices by 20 to 25 per cent on key items.

But the competition is tough. Fashion e-tailor The Iconic boasts that it is number one in the fashion web stakes in Australia. The local start-up was launched nine months ago by a group business consultants and has grown from five people to 350 people, selling mainly Australian labels, such as Sass & Bide and Camilla and Marc, at full price. Speed is its weapon in the retail bathe. It promises to deliver with-in three hours of placing an order in Sydney and overnight for other Australian cities. “We have more than 100,000 visitors to our sire everyday and our competitors are all around 50,000,” co-thunder Finn Haensel said yesterday. he secret is really offering Australians a chance to shop conveniently.”

Its new television campaign has helped swell the orders from the arena known as “couch commerce” or those who surf the web or iPad while watching TV, Mr Haensel said. But another online battle for customer loyalty in Australia is also on the horizon — in the grocery aisles. New research from Nielsen shows one in three Australians are now buying their household groceries online and lag behind their cousins in Britain where one in two purchase their food staples via the web. Nielsen’s director of shopper insights, Leigh Shaw, said e-commerce was the Lipping point in competition and a real opportunity to grab loyally by the grocery retailers, particularly Coles and Woolworths.

“When you look at people who are buying their groceries online in Australia — and there are lots of them — very few of them are doing so at a Coles or Woolworths site,” Ms Shaw said. Although Coles and Wool-worths dominated the bricks and mortar market, they were failing to replicate their success online and missing out on building their customer base. “What shoppers want more than anything is convenience so until online shopping is more convenient than jumping in your car and going to a grocery store on the way home, then we’re not go-ing to be at that tipping point,” Ms Shaw said.

In Britain, the online grocery market is less fragmented and is led by the large supermarkets. The expectation is that the Australian consumer will follow suit as Coles and Woolworths gain online traction, according to Nielsen. But it is not just the retailers who are plugging into online story as the business of logistics has become more crucial than ever. The likes of DHL, Toll Holdings and Australia Post are all working hard to keep up with demand and cement relationships with retailers.

Since joining Australia Post as chief executive in 2010, Ahmed Fahour has kept a firm eye on driving business through its online offering for customers such as The Iconic. “We know that 70 per cent of our parcels that we deliver are generated as an e-commerce transaction,” an Australia Post spokesman said yesterday.

The latest move to cater to the demand of buyer convenience are parcel lockers that notify shoppers when a delivery is ready for collection from locations, selected by the consumer. Australia Post was the first to market with its free lockers, launching last October. “It is purely based on consumer demand,” the spokesman said. “We know people are not always Growth in online sales v retail sales home so it is about giving them choice of delivery.”

The Mark Bouris-led technology provider TZ is also on the trail, recently announcing new partnerships with logistic players to install secure smart lockers. NAB’s new figures on online retail sales is due to come out next week. On its last count in June, NAB found that internet purchases had grown by 19 per cent year-on-year while traditional retail had grown at 4 per cent. New data is expected to reveal further growth of web spending.

But does all the investing in online by big retailers really translate into online sales? Chairman of furniture and electrical chain Harvey Norman Gerry Harvey thinks not, at least in his sector. This week he said that when Harvey Norman started its own website several months ago, the company thought it would be bigger than what eventually transpired. “We do $50,000 to $60,000 dollars a day (in sales) on the internet across the whole of Australia,” he told the Sky Business Channel. “We’ve got a wonderful site.

We’ve got 25 per cent more visitors to that site at the moment than we had six months ago that’s a great growth. But what they’re doing is a lot of research on that site, then they come into our store and buy. But they’re not buying on the internet,” he said. “Or they come into the store and they don’t buy and then they go back home and buy on the internet and that’s an internet sale.” But he said less than 1 per cent of items such as fridges were sold online in Australia. “Everything is not sold on the internet,” he said. That may be true in some quarters, but, for the new brave new world of online sales, it seems you have to be in it to win it.