Online growth the bright spot in Australia's retail sector

25 September 2019 Consultancy.com.au

A new study by Bain & Company has found that e-commerce is the growth bright spot in Australian retail. Success however depends on online customer experience, and can be improved further if an e-commerce experience is blended into traditional shopping.

The online retail segment is booming in Australia. According to the analysis, rapid growth will see the segment account for between 30% to 40% of all retail growth over the next three years. By 2021, turnover of around $30 billion is estimated to be added to Australia’s retail scene, with nearly $11 billion coming from e-commerce transactions and digital shopping.

A large share of online shopping behaviour however blends in with the brick-and-mortar channel. The researchers found that when it comes to research on potential purchases, 80% of this step is completed online – through a desktop, smartphone or tablet. However, when it comes to actually purchasing the product/services, the physical experience naturally gains in importance.

Purchase channel

The importance of brick-and-mortar differs per sector. In the grocery sector, more than 80% of purchases are done in the store, while at the other end of the spectrum, in the consumer electronics landscape, less than half of shopper deals are closed in stores. 

The study further uncovered that millenials shop very differently than other generations do. Compared to baby boomers, they are highly likely to do their research on their mobile (2.8x more likely), use new technologies such as voice assistant (2.3x more likely) and ultimately spend more money through the online channel (1.8x higher online spend). 

Similarly, the factors that motivate their purchasing decision differ too. They are more price aware (rebates/discounts are 2.7x more important to millenials, they value speed of service more (same/next day delivery is 3.3.x more important) and place more value on a hassle free experience (an easy to return process is 6.2x more important to them). 

Millenials shop very differently

All in all, the complementary combination of online and brick-and-mortar is found to be retail’s silver bullet to success. The research identified that Australian omnichannel retailers’ online sales are highly correlated with their online Net Promoter Score, which improves dramatically when customers shop in both channels. 

“The winning formula provides customer convenience – range, availability, speed – at the lowest delivered cost,” concluded the Bain & Company report. 

In another recently released study by Bain’s Australian team, the firm found that achieving more male engagement is key to close the gender equality gap. Workplace inequality remains one’s the country’s most common flaws of the labour market, with women underrepresented in leadership tiers and still facing a pay gap with men.

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