- Average online transaction value up 14 per cent
- Overall online sales forecast to grow 20 per cent in next year - mobile sales set to double
- 43 per cent of retailers will increase technology budgets in next 12 months
- Two-thirds of retailers positive or unfazed by weakening AUD
- Just 36 per cent of retailers say they are effective at harnessing big data
Changes in online consumer behaviour are driving a substantial growth outlook for online and mobile retail sales, according to the inaugural CommBank Retail Insights report.
The report finds consumers are shopping online less frequently but spending more per transaction, with the average transaction value up 14 per cent year on year.
Consumers also remain highly selective and loyal, with more than 90 per cent of online shoppers transacting with just three or fewer brands each quarter, and two-thirds of customers shopping online for just one category of goods.
CommBank Retail Insights combines an in-depth survey of more than 500 retailers in Australia, with an analysis of around three billion dollars in transaction data from CommBank credit cards covering ten major online retail categories.1
Following a 14 per cent increase in total online spending in the 12 months to 31 March 2015, the research reveals that retailers expect a 20 per cent increase in online sales over the next 12 months. When looking specifically at the proportion of sales conducted through mobile devices, retailers expect this to double over the same period.
Retailers are looking to take advantage of changing customer behaviour towards online shopping, with 43 per cent of businesses expecting to increase their technology budgets and introduce new channels such as social media and mobile apps.
Jerry Macey, National Manager, Retail Industry, Commonwealth Bank said the research shows the time is ripe for retailers to capitalise on changing consumer preferences for online purchasing.
“The shift to online shopping is supporting confidence in the retail sector. Retailers are responding by maintaining or boosting investment in technology and introducing new digital channels to capture substantial expected sales growth,” Mr Macey said.
“While businesses are witnessing the rapid pace at which consumer behaviour is changing, they are saying they are concerned about the costs associated with technology solutions and marketing.”
The report also finds that, the tradition of smaller, regular purchases of items such as music and books, is being overtaken by sales of categories such as high-end fashion, technology and appliances, albeit on a less-frequent basis.
Channel integration a low priority for investment, big data remains a challenge
While nearly three-quarters of retailers (74 per cent) believe integrating physical, online and mobile channels is critical to business success, just two per cent of retailers indicate that channel integration is the single highest priority for investment.
In addition, while multi-channel retailers are investing in online channels, many ‘pure play’ online retailers are planning to establish a ‘bricks and mortar’ outlet in the next 12 months (13 per cent).
And while most retailers appreciate the potential insights that can be gained by leveraging big data analytics, the research shows only 36 per cent believe they’re effective at harnessing their data to drive marketing decisions and optimise the customer experience.
“Retailers are acutely aware of the role that channel integration and big data can play in enhancing the customer experience, however, currently few are planning integration as a priority for investment,” Mr Macey said.
Weakening AUD having minimal impact as few retailers generate offshore sales
Almost two-thirds of retailers said that the weakening Australian dollar has either improved or not changed their ability to compete with overseas competitors. Despite this, more than 70 per cent of retailers said that costs to suppliers had increased, while less than half have increased the prices they charge.
Despite competition from global entrants, only 21 per cent of Australian retailers are currently generating sales from offshore. Businesses see primary opportunities for growth in the NZ/Pacific Islands, Asia and North America regions.
For a full copy of the report visit commbank.com.au/business/industries/retail-business
1 Data for the 24 months to March 31, 2015
About the CommBank Retail Insights
The first Edition of Retail Insights is an exclusive, wide-ranging analysis of the Australian retail sector. It is based on:
- An analysis of 80 million online transactions from over 3 million CommBank cardholders, across 279 brands in 10 retail categories for the 24 months to March 2015.
- Quantitative online research conducted by ACA Research.
ACA’s surveys were conducted between 29 July and 24 August 2015 and involved a total of 501 decision makers from small, medium and large retailers across Australia, with turnover ranging from less than $1 million to over $500 million. They focused on four key retail sectors: Homewares & Hardware; Food & Liquor; Clothing & Footwear; and Other Retail.