Shoppers trust ‘brick and clicks’ retailers more than online only

Shoppers trust ‘brick and clicks’ retailers more than online only

September 2, 2013 – 1:13PM

Eli Greenblat

Traditional bricks and mortar retailers, which for a long time refused to believe the hype about online sales, have finally made an inroad into the crucial revenue channel by winning back customers from pure-play operators which have dominated the area. The latest National Australia Bank retail sales survey shows many bricks and mortar shops are successfully evolving into “bricks and clicks” operators, offering customers offline and online shopping.The survey, released on Monday, reveals that in the 12 months to July, pure-play retailers, including eBay and Amazon, controlled 70 per cent of online retail sales in Australia, down from 73 per cent at the start of 2010.

It also showed that despite a slow start to the year, Australia’s online spending rose to $14.1 billion in the year to July, equivalent to 6.3 per cent of traditional retail sales.

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The push-back by traditional retailers, in which companies such as David Jones, Myer, Woolworths and Harvey Norman have poured millions of dollars into an omni-channel strategy, is working.

Bricks and clicks retailers generally recorded stronger growth rates than the pure-plays in 2011 and 2012, NAB said.

NAB chief economist Alan Oster said the dynamics between pure-play and bricks and clicks were changing. Pure-play operators still dominated but were losing market share and facing strong inroads from traditional bricks and mortar retailers that had invested in their online shops.

“This decline demonstrates that retailers appreciate the value of a multi-channel business model and are succeeding to grow online activity. We think the previous dominance in pure-play retail may continue to slowly diminish,” Mr Oster said.

The survey also found the market share of pure-play sites and the push-back from traditional stores varied according to the retail category.

Within fashion, pure-play sites had 57.2 per cent of the Australian market, in homewares and appliances 39.9 per cent, in groceries and liquor 37.8 per cent but in department and variety stores sales 94.6 per cent.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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