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Media Release

More online retailers set to open physical stores to drive sales

More online retailers open physical stores

CommBank research shows increasing trend towards multi-channel retail.

An increasing number of pure play online retailers are planning a physical store to provide a tangible experience for customers and drive further online sales, according to the Commonwealth Bank Retail Insights Report.

The report reveals 18 per cent of online-only retailers are planning to establish a physical outlet in the year ahead, up from 13 per cent in the previous half yearly report, and over three quarters of retail businesses will have a physical presence. 

Commonwealth Bank’s National Manager Retail, Jerry Macey, said the drive towards omni-channel retailing is picking up pace with many online and physical businesses seeking to extend their reach.

“Bricks and mortar and multi-channel retailers are doing more online as customer preferences evolve. 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 U.S., 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,” said Mr Macey. 

Retailers are also forecasting robust overall online sales, with an average 24 per cent growth rate expected in the year ahead, up from 20 per cent in the previous half. 

Overall they expect 35 per cent of online sales to come via mobile devices over the next 12 months.

In an effort to capture expected online sales growth, technology budgets are again set to increase over the next 12 months with 45 per cent of retailers expecting to lift investment. Overall, the top priorities for investment are e-commerce, loyalty programs and social media.

In terms of outlook, the report shows pure play online retailers are significantly more optimistic than their multi-channel peers, with 46 per cent expecting an improvement in conditions, compared to just 28 per cent among multi-channel businesses.

When looking at the drivers behind the outlook for retailers, for those expecting a decline, 95 per cent attribute it to economic factors. Conversely, for retailers indicating an improvement in business conditions, 71 per cent attribute it to internal factors such as business growth and the introduction of new products.

“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,” Mr Macey said. 

About the Retail Insights Report 

The Retail Insights Report is based on a quantitative survey conducted by ACA research. A total of 382 surveys of senior retail business decision makers were conducted between 4 February and 8 March 2016.

For more details about Retails Insights, see the full report here.