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Online Retailers Look To Physical Store Potential

Pure-play online retailers are increasingly gravitating towards opening physical retail outlets, according to a new Commonwealth Bank report.

The Commonwealth Bank’s Retail Insights report shows that 18 per cent of online-only retailers are planning to establish a physical outlet in the coming year, rising from 13 per cent in the previous half-yearly report.

The report finds that over three quarters of retail businesses will have a physical presence.

“Bricks-and-mortar and multi-channel retailers are doing more online as customer preferences evolve,” Jerry Macey, Commonwealth Bank national manager retail, commented. “At the same time, emboldened digital retailers are opening physical stores to complement and drive further online sales.

“We have seen large online retailers such as Amazon unveil physical stores in the US, and this trend is expected to strengthen over the year ahead, with almost one in five pure-play online retailers planning a bricks-and-mortar outlet by early 2017.”

Meanwhile, retailers forecast strong online sales, with an average 24 per cent growth rate expected in the coming year, up from 20 per cent in the previous half, with 35 per cent of online sales expected to come via mobile devices.

In line with this, technology budgets are again set to increase over the next 12 months, with 45 per cent of retailers expecting to lift investment, with e-commerce, loyalty programs and social media the top priorities.

Pure-play online retailers are significantly more optimistic than multi-channel retailers when it comes to outlook, with 46 per cent expecting an improvement in conditions, compared to 28 per cent among multi-channel businesses.

For retailers indicating an improvement in business conditions, 71 per cent attribute their outlook to internal factors such as business growth and the introduction of new products, while for retailers expecting a decline, 95 per cent attribute their outlook to economic factors.

“Our research shows the most optimistic retailers are those who have taken control of their own destiny, rather than looking to external economic conditions to drive sales growth,” Macey commented.

 

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