Traditionally, Christmas is a very good time for everyone involved. From consumers who are eager to shop for gifts for loved ones, to the retailers providing shoppers with goods and services. 2011 broke this mold, with Australian retailers reporting a drop in December sales figures in comparison to November. Retailers hoped for a 0.5 percent increase, and the 0.1 percent decrease came as a significant blow. This unexpected dip made 2011 the worst performing year for retail since 1984 (2011 Retail Sales Worst in 27 Years as Christmas Disappoints 2012).
another reason Christmas is disappointing
On the other hand, another figure showed an opposite trend. It is expected that Australian online retail industry to grow by 40 percent by 2012, in comparison to 2010 numbers (Bullock, 2010). While latest figures show that online sales only amount to about 5 percent of total retail sales, it’s predicted that it will only be rising. This has prompted local traditional retailers such as David Jones, Myer, Harvey Norman, and Target to call for GST to be added to overseas online transactions (Greenwood, 2011).
E-commerce or E-retail is not a new phenomena, it has been around almost as long as the Internet. While the dot.com crash of 2000 dampens expectations somewhat, online commerce chugs along consistently, posting tremendous growth year after year (Dennis, Fenech and Merrilees 2004). Recent study from the United States predict that compared to 2011 numbers, there will be a rise of 62 percent by 2016, which will amount to 327 billion USD (Rueter 2012). While Australia is not as advanced as the United States when it comes to online commerce, its high Internet penetration rate means that it will not be far behind.
With the emergence of generation Y as legitimate shoppers, prior literature regarding online shopping behavior needs to be revisited and examined. Generation Y are practically born with the Internet available to them, especially in developed countries. Online shopping literature has indicated that extended experience with the Internet will increase the likelihood of online shopping. With this in mind, while retailers have plenty to whinge about now, online retail still only amounts to about 5 percent of total retail spend. This number is predicted to rise rapidly, and traditional retailers can only survive by finding new and innovative ways to reinvent the whole retail experience. The arrival of Generation Y and their constant link with the latest information will surely push traditional retailers to rethink their strategy.
not all of them are that well informed.
The funk that traditional brick and mortar stores are currently experiencing is an issue that needs to be addressed by everyone involved, and marketers are key in trying to find a solution. Innovation is often hailed by many as the savior that will lead retailers out of this rut, but not many realizes that innovation takes many shapes and forms, and someone needs to create innovation that consumers would like to connect with. This blog will try to highlight various aspects that differentiates the experience of shopping online and shopping in a brick and mortar store, and try to find the reasoning of why consumers do what they do. We will also try to shed some light on some of the innovative practices that some retailers are trying to do in order to combat consumers declining interest of the physical store. Finally, we will also try to share the reasoning of why it is important to save traditional retailers, and why it does have an impact to all of us.
Reference:
2011 retail sales worst in 27 years as Christmas disappoints. 2001. http://www.marketingmag.com.au/news/2011-retail-sales-worst-in-27-years-as-christmas-disappoints-10373/ (accessed March 3, 2012)
Bullock, M. 2010. Australia’s Ecommerce Industry is Expected to Experience Significant Growth in the Coming Year. http://www.eway.com.au/ecommerce-news/post/2010/07/08/Australias-ecommerce-industry-is-expected-to-experience-significant-growth-in-the-coming-year087.aspx (accessed March 7th, 2012)
Greenwood, H. 2011. Switched-on Consumers Signal Sea Change in Retail. http://www.smh.com.au/business/switchedon-consumers-signal-sea-change-in-retail-20110107-19iq7.html (accessed March 8th, 2012)
Dennis, C.E., T. Fenech, and Merrilees, B. 2004. E-Retailing. Chicago: Routledge
Rueter, T. 2012. E-retail Spending to Increase by 62% by 2016. http://www.internetretailer.com/2012/02/27/e-retail-spending-increase-45-2016 (accessed March 8th, 2012).
With the development of economic, the e-commerce is becoming more and more popular in the modern business world. As talked in this blog, online retail industry has the tendency to continue upgrading. It is true that there are a large number of people like go shopping through online. It is without doubt that the traditional retailers are facing big challenge now.
ReplyDeleteI'm quite agree with the point the traditional retailers should rethink their stratgies, either make changes, either lose the markets.
Internet shopping has become popular due to the growing number of consumers that have access to the internet. It convenient and it definitely saves time in comparison to the traditional shopping experience. Your blog is very relevant especially with regards to the generation Y because it is the segment that tends to use internet shopping more in comparison to other segments.
ReplyDeleteI found it interesting that there is so much hype from retailers about online shopping when it currently only sitting at about 5 percent of total retail spend. I thought it would have been a lot higher than this, so I really appreciate this clarification within your blog post.
Thanks for the comment Shu, I think any business cannot be successful by standing in one spot. New inventions or developments happen all the time, and businesses who can adapt are the survivors. I think considering the fact that Generation Y is maturing as consumers, there might be a significant uptick of online shoppers in the near future.
ReplyDeleteHi Mersyl,
ReplyDeleteYes, it is only 5 percent of total retail spend, so if it is considered a problem now, imagine how brick and mortar retailers are going to react once that number has hit 10 percent, or 20 percent? Because I truly believe that it is just a matter of time.
Also, even though the actual purchase themselves only amount to 5 percent of total retail, there are also side effects of online shopping (that I try to highlight in other posts in this blog) that takes away the profit margin of traditional retailers. Thanks for commenting!