Ari Sharp December 15, 2008 - 12:16AM Advertisement
BRICKS-AND-MORTAR retailers are staking their claim on cyberspace as dips in consumer confidence and the tumbling Australian dollar give them an edge over web-only brands.
While many traditional retailers ceded the advantage to exclusive internet businesses such as Amazon and eBay in the early days of online retailing, many are now recalibrating their web presence to take advantage of their considerable brand equity.
Internet traffic monitor Hitwise says that since the collapse in value of the local currency in October, traditional retailers such as Dick Smith and JB Hi-Fi have surged ahead in their market share of online shopping. The currency movement means that the Australian-dollar price of goods purchased overseas has skyrocketed relative to the price of local goods.
The combination of the drop in the dollar and faltering consumer confidence had resulted in consumers moving towards local trusted and known brands, Hitwise research director Alan Long said.
Data collated by Mr Long shows traffic to the websites of traditional retailers has grown at a steady clip for several years, but the growth in predominantly online brands, which include Deals Direct, Amazon and Dell, will slow this year compared with last. As of early this month, Hitwise found traditional retailers attracting 20 per cent more traffic to their sites than online-only sites.
Myer department store chief executive Bernie Brookes said he was anticipating 400 per cent growth in use of the Myer website in the festive season after a significant increase in the past fortnight.
"Many Australians are time-poor, and while we significantly increase our shopping hours in the three weeks leading up to Christmas, certainly there has still been a big jump in the use of the Myer website," Mr Brookes said.
Increased security, including the introduction of eBay-owned payment system PayPal, means shoppers are more willing to buy online. But Myer said many of its customers prefer to browse through goods online before heading to shops to seal the deal.
One retailer hit by the tumbling dollar was US department store JCPenney, whose Australian website was abruptly closed a few weeks back only months after it was launched. The closure followed a global rethink of its web retailing, but the local site was hampered by Australian-dollar price increases.
One compromise between taking an established brand online and starting a web-only brand has been adopted by RR Australia, owner of electronics retail brand Radio Rentals.
The company last month launched its Big Brown Box site, which uses its national stores for distribution but will in some cases undercut these stores' prices. RR Australia managing director John Hughes identified the quandary faced by many traditional retailers.
"Given the massive commitment that traditional retailers have to bricks-and-mortar infrastructure, we can certainly appreciate why they have fought the urge to go online," he said. "But the world has changed significantly and consumers have become very savvy with the internet."
Harvey Norman chairman Gerry Harvey last month described online retailing as a waste of time.
"I've got an online part of my business, but I definitely would not put more into it. That'd be a recipe for a disaster," he told business magazine SmartCompany.
While Mr Harvey may be weary of the number of purchases made online, there is strong evidence consumers are using the internet for browsing and price comparison, Deloitte consumer behaviour expert Katrina Doney found in a recent survey of shopping habits.
"Results of the survey show that online research is important regardless of whether or not the consumer is buying the product on the internet. Even for things that are less likely to be purchased online — like sports equipment, white goods, apparel and furniture — the internet can be a useful tool to research products and compare prices," Ms Doney said.
The Deloitte survey found that while 44 per cent of shoppers were willing to go online to buy books, DVDs and music, and 23 per cent would buy consumer electronics on the web, only 10 per cent were willing to buy clothes and 4 per cent furniture through their computer.
http://www.retail.org.au
This story was found at: http://business.theage.com.au/business/shoppers-let-their-fingers-do-the-hawking-20081214-6ybo.html
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