Malls set to recapture their time in the sun

As the Covid pandemic recedes around the world and restrictions and lockdowns ease, the years-long surge of ecommerce has ebbed and with it the inflated hopes of some online retailers. Australian consumers are getting back to the high-street shops for a wide range of reasons: to see and meet and talk to people; as a window-shopping outing; to try garments on before buying them; or see major purchase items up close – to feel how smoothly that fridge door opens, or hear that television audio or bounce on that bed. Consumers are also devoting more of their discretionary dollars to entertainment and travel in a surge of long pent-up demand.

According to Australia Post’s Inside Australian Online Shopping eCommerce September report, online purchases were down 28 per cent compared with September 2021, when pandemic restrictions were in force across much of the nation.

Global online shopping trends point the way for Australia. In the US, Census Bureau data show online shopping growth falling behind the overall retail spend, Bloomberg reports, and online US retailing giants such as Amazon and Shopify, as well as European ecommerce retailers Asos and Boohoo Group, are feeling the pain of shrinking markets and tanking shares.

Sean Bone, Australian ecommerce general manager at global media company GroupM, notes that online shopping patterns in Australia broadly follow those in other developed nations.

“Depending on the survey, we have something like 75-80 per cent of people who shop online in some way, shape or form during the year,” he says. “That’s roughly comparable with a lot of other nations such as the US and UK, but in terms of a percentage of retail sales we are behind those markets.”

September last year, he says, was the peak of ecommerce in Australia and for non-food purchases, one in four dollars in the retail economy went through ecommerce. “We do see the growth rate slowing substantially this year,” he notes, adding that now, without lockdowns and restrictions, online shopping has returned to a more traditional seasonal sales cycle.

Humans, he adds, are generally social animals which can limit the reach of ecommerce and explain the desire to shop in person – at least some of the time. Certain ecommerce attempts to replicate that in-person experience, for instance with “live shopping”, which entails live-streamed “shopping events”, but these still mean looking at a screen, rather than an actual human face. “There are aspects of ecommerce, like ‘live shopping’, that are exploring versions of that in a digital space, but we are social creatures as a species,” Bone says.

Nevertheless, he expects substantial continued year-on-year growth for online shopping, with the growth trajectory climbing up to the high teens or early 20s within the next five or so years, assuming there isn’t another pandemic in the foreseeable future.

“There was a huge influx of new shoppers who were forced in many ways to shop online (during the Covid pandemic), but there is a fairly robust core of heavily invested ecommerce shoppers,” he says, adding that data show about half the volume of all Australian online shopping is by those 13 per cent of households.  In New Zealand, too, 40 per cent of online shopping by value is coming from ten per cent of households.

The Australia Post September online shopping report shows that certain categories of online retailers were hit harder than others by the post-pandemic slowdown. The major and discount stores category had an online shopping slump of 37 per cent year on year in September; the home and garden category 32 per cent; fashion and apparel 29 per cent; hobbies and recreational goods 28 per cent and health and beauty 24 per cent.

Groceries are in an altogether different type of online shopping, and Bone says this type of ecommerce was once a laggard in the field of ecommerce but it is now steadily growing, with hybrid options such as ‘click and collect’ proving both popular with consumers and economic for supermarket chains.

“At the start of the pandemic, Google pointed out that Australia had one of the highest levels of interest in ‘click and collect’ of any market in the world,” he says, adding that substantial vehicle delivery costs mean ‘click and click’ is the financially sustainable option for grocery retailers, whose small margins can be eroded by the costs of collating and, more particularly, delivering online shopping orders.

Regardless of hiccups along the way, the long-term outlook for ecommerce is rosy. “Globally over next five years ecommerce will reach about 25 per cent of sales,” Bone says.  “Our expectation is that Australia will be lower than that level but following that same trend line.”

A survey by the Sydney University business school’s Institute of Transport and Logistics Studies found more than 76 per cent of Australians shopped online in September this year, spending an average of $375 per month. Online shoppers in Queensland, South Australia and NSW spent the most. Groceries were the biggest buy, accounting for 27 per cent of online spending.

“The tendency for people now they’re feeling a little safer getting out and about, they want to get out and it’s called the feely-touch,” says David Hensher, professor at the business school and founding director of the Institute. “They want to go back to the shopping centres; they like to touch it and look at it, but at the same time that’s when they do their other shopping as well, like their groceries.”

He says data from Transport NSW show that although the number of commuters has fallen in peak-hour, there are increased numbers of off-peak travellers, demonstrating the very human desire to get out of home, go shopping, go to restaurants and go to entertainment venues. “This is a very fluid circumstance,” he says. “We’re still in Covid, even though we’re searching for the new normal.”

Australia Post’s head of eCommerce Data Analytics, Rose Yip, says Australia’s on-line shopping has continued healthy growth that will continue past the Covid and post-Covid blips.

“We’re back to where we should have been in the first place, if you just normalised the last couple of years,” she says, adding that analysis that simply excluded the Covid and immediate post-Covid periods demonstrated that the rate of online shopping in 2022 had increased compared with 2019 and some 5.4 million Australian households now shop online regularly, every month, 1.5 million more households than were online shopping in 2019. “We’re coming out of restrictions, there’s some catch-up happening,” she says.

Like supermarket chains, Australia Post has introduced a customer collection system designed for ease of use. Yip says data show online shoppers appreciate the Australia Post parcel lockers, set up in many locations around Australia. A code to open a particular locker is sent to a customer’s phone for 24-hour ease of collection. Shoppers can use the Auspost app to track their parcel and re-direct their deliveries to a parcel locker if they choose to.

GroupM’s Sean Bone says ecommerce is evolving into a more personalised offering in Australia and elsewhere. “The underpinning of future growth is the realisation we need to shift from a transactional focus to a customer lifetime value,” he says, adding that rather than focusing on single sales, retailers are moving to reward their most loyal and valuable customers and ensure their shopping (and their returns) are as easy, fast and painless as possible by “treating it as a relationship rather than a transaction”.

Australian Financial Review