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Battle between online and brick and mortar stores

shopping3Research has shown there are fewer shoppers at shopping centres in Australia due to the emerging presence of online websites.

IBISWorld reported leading shopping operators adjust to this ongoing trend by offering a wider range of shopping options and services in order to lure back their customers.

According to its latest industry research, the supermarket sector shows its revenue of A$101.1 billion reported in 2017-18 may possibly rise to A$110.5  by 2022-23. Woolworths, Coles and Aldi have all continuously created different marketing strategies to maintain their loyal customers.

“Digital platforms that enhance in-store customer shopping experiences and eliminate the divide between bricks-and-mortar and online operations are also part of retailers’ attempts to increase footfall,” said Kim Do, IBISWorld senior industry analyst.

Christmas shopping period will have more bargain hunters, heavy discounting and fierce competition from online retailers. Likewise, supermarkets recently like Woolies, Coles and Aldi have ventured into heavy discounting with their grocery products to try to lure back their customers and continuously compete with each other.

“An estimated 10.8% of all retail spending occurs in December in the lead up to Christmas Day. This year, festive shopping is expected to remain subdued with annual retail revenue increasing by just 1.9% over the year to December 2017. This means the average Australian will spend about $420 on Christmas gifts this year,” said Do.

During the Christmas period, IBISWorld’s latest research has also shown revenue for retailers has increased on average by a substantial 23.0% from November to December, over the past five years.

“Despite the season’s importance for shopping centres, growth in Christmas spending has slowed over the past five years. More conservative retail spending can largely be attributed to negative consumer sentiment, along with subdued growth in household consumption expenditure and household discretionary income over the same period,” said Do. “Many consumers have opted to shop online as a result of these trends.”

Online operators typically have lower fixed costs than traditional bricks-and-mortar stores, which means they can offer consumers lower prices and better discounts.

Many international retailers, such as Marks & Spencer, River Island, Next, Nordstrom, and Macy’s, have launched online ordering platforms in Australia in recent years, which has put additional pressure on Australian enterprises.

“The convenience of online shopping has also attracted time-poor customers. Online stores provide a broad selection of products, higher stock levels, and allow for easy price comparisons. Customers are also able to avoid the inconveniences of making in-store purchases, such as parking and restricted trading hours,” said Do.

According to IBISWorld research, as Australian consumers increasingly embrace online platforms, shopping centres will review and innovate their business model to broaden their value proposition for consumers.

The ability of shopping centres to sell themselves as an entertainment destination during the holiday period will be a key factor in increasing shopping centre foot traffic. Although online shopping typically presents a threat to shopping centres and traditional retailers, it can also present new opportunities for innovative marketing techniques.

“In addition to expanding tenancy mixes, shopping centre operators are expected to work alongside retailers to enhance customers’ instore shopping experiences through leveraging technology advancements and online platforms,” said Do.

“Often consumers see retailers’ physical stores as showrooms, although they go on to order products online. As a result, shopping centres and retailers that are able to use their physical presence to complement online offerings and vice versa, will be in a better position to capture consumer spending.”

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