In Summary

The embarrassing failure of Myer’s website through the post-Christmas sale period reinforces a widely held view that Australia’s large retailers have struggled to adapt to the online environment. The reasons put forward for this perceived failure include an uncompetitive retail environment, retailers who are also major retail property owners and the highly geographically-concentrated distribution of Australian consumers that has enabled major retailers to develop networks of stores that reach a large proportion of the available market. 

While doubts exist about Australian retailers, there are few doubts regarding Australian shoppers. Australian consumers have embraced online retail and there is no sign that this is abating. We have conducted four surveys between 2007 and 2013 and there has been growth in activity in each period. Between 2009 and 2011 there was a levelling off of growth but the period 2011 to 2013 again saw a strong increase in activity. 

In 2007 six in ten Australians did not purchase online, by 2013 this had fallen to less than a quarter. In 2013 the proportion of Australians who shopped online was very similar to comparable countries. Australia, New Zealand, Sweden and the UK have almost identical rates of online shopping at 85%, 86%, 85% and 87% respectively. This compares with 76% of Americans and 68% of Swiss. Australians are frequent online shoppers with three out of ten now shopping online every week, or more often, compared with two in ten New Zealanders and one in ten Swiss. 

Online retail in Australia is enjoying a strong second wave of growth as Australian consumers integrate online shopping into their everyday shopping experience. Over the period 2007 to 2013 there has been a consistent pattern of large increases in the number of online purchases made by Australian consumers accompanied by smaller increases in the value of monthly purchases as online retail shifts from being a special undertaking to being a part of everyday shopping. 

This ‘normalisation’ of online retail has been recognised in the US by players such as Walmart and Amazon who are rolling out networks of fulfilment centres to maximise the proportion of US consumers to whom they can offer same day delivery. In addition, major retailers are integrating their existing bricks’n’mortar stores into their online distribution networks. Online retail will increasingly be about convenience as much as lower prices and greater range. 

Things are not all bleak for Australian retailers. Despite misgivings about the commitment of Australian retailers to the online environment Australian consumers continue to express a strong preference for shopping with local websites and this preference strengthened between 2011 and 2013. This preference is reflected in the proportion of Australians online spending devoted to local retailers. Just under a half of consumers spend either ‘all’ or ‘most of’ their total online shopping with Aussie websites. 

Many Australian retailers have extensive networks of stores that can be deployed as a distribution system to support online sales. Myer for example has 67 stores across Australia so that the majority of Australian households are within a few hours’ drive of a Myer outlet. This is a major strategic advantage in competing with overseas retailers. 

The other piece of good news, for some Australian businesses at least, is that Australians’ resistance to paying for digital content is weakening. In 2009 and 2011 seven in ten Australians told us that they wouldn’t consider paying for a digital version of a newspaper. In 2013 this fell to six in ten. Similarly in 2009 and 2011 six in ten Australian consumers would not pay for digital music or film and this fell to just under a half in 2013. The NBN and its faster download speeds will only increase the attractiveness of digital entertainment for Australian households. 

Australian consumers are doing their bit for the digital economy. They are enthusiastic online shoppers and largely prefer shopping with Australian firms. Hopefully 2014 will be the year that Australian retailers come to the party, get their websites in order and learn to stop worrying and love the internet.