Finance Consumer Retail therapy: How online sales are strengthening Australian shops

Retail therapy: How online sales are strengthening Australian shops

Online sales are growing rapidly because of the coronavirus pandemic. Photo: Getty
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Clothing retailer Kathmandu expects to earn $70 million this financial year despite the financial devastation caused by coronavirus, with online sales playing a major role.

In a trading update to investors, the company revealed sales are once again increasing after ending May down 15.1 per cent on its normal levels over a 10-month period.

Same-store sales, which compares individual shops’ sales over time to get like-for-like comparisons, increased 12.5 per cent in just six weeks between May 18 and June 28.

But not because people are returning to high streets; they’re shopping online.

In-store sales rose just 2.2 per cent during those six weeks, while online sales jumped 78 per cent.

Kathmandu-owned surfwear brand Rip Curl experienced something similar, with overall sales rising 21 per cent off the back of a 151 per cent increase in online sales.

In-store sales enjoyed only a 5.1 per cent lift.

The numbers reflect a broader shift towards online shopping that industry insiders expect will continue well beyond the end of the coronavirus pandemic.

Research from Australia Post, for example, found that 1.6 million households in Australia bought something online every week in 2019.

In April 2020, that number had grown to 2.5 million households, with year-on-year growth in online purchases hitting a peak of 135 per cent the week after Easter.

That trend is likely to continue, according to Anastasia Lloyd-Wallis, head of consumer insights with business consultancy Retail Doctor Group.

“Around 80 per cent of retailers we surveyed are expecting these online sales to continue post-COVID-19,” she told The New Daily.

It’s having a massive impact on their future strategies, with many planning to reduce their shop numbers or not planning to open as many stores.”

Customer behaviours are shifting too, with research conducted by Ms Lloyd-Wallis and her team finding that one in four consumers are buying more online and plan to keep doing so after the pandemic.

Taking the experience online

Although retailers mainly compete on price, Ms Lloyd-Wallis said shoppers’ in-store experience is also a major factor in their success.

“An example would be beauty,” she said.

“There [are] the things you buy out of necessity and there [are] the things you buy purely for the experience – trying things out, seeing what’s new.”

The same is true for luxury brands and retailers that appeal to customers through the experience they offer as much as the things they sell.

makeup artist
Cosmetics retailers have had to find new ways to serve customers. Photo: Getty

These brands will need to find new ways to engage with customers as the convenience of online shopping becomes the ‘new normal’.

And some retailers are already finding ways to do this, with some cosmetics brands now offering one-on-one online beauty consultations with customers.

Fashion retailers have been quick to respond too, with many providing a ‘personal shopper’ service to help customers find exactly what they want.

Postal services’ red letter day

Australians’ growing appetite for online shopping has led to big gains for Australia Post and the more than 20,000 courier services nationwide.

IBISWorld senior industry analyst James Caldwell said the sector’s 2020 revenues showed the coronavirus had perversely helped the sector to grow.

Revenue is expected to see “quite a boost” in 2020 – up 2.4 per cent to $5.5 billion in the courier space alone – and the number of delivery service providers is also tipped to increase.

At present, the industry directly hires about 37,000 people, Mr Caldwell said.

But that’s expected to climb to 50,000 in the next five years, even without taking into account the sub-contractors brought on by larger players to meet spikes in demand.