Is Online Shopping Overtaking The Mall?

By Branko Miletic

  • Online shopping to grow by 5.5 percent annually
  • Set to reach over $21 billion in sales by 2014
  • 50-70 percent of purchases will come from outside Oz

Hands up if you have we heard this before—online shopping is finally taking over traditional mall shopping. If you’ve been to your local shopping centre recently you wouldn’t know it as the crowds are as big as ever and mall parking is as is usual this time of year harder to find than hen’s teeth. But the reality is that online shopping is getting stronger with each passing year.

According to some statistics, online shopping has increased by 40 per cent- not bad by any standard – even some major retailers have followed this trend and voted with their mice.

For example, David Jones recently launched their online store, which stocks more than 1500 products including beauty, fragrance, body care accessories, Christmas hampers, toys, homewares, books and appliances.

Myer too has taken the cyber plunge and set up a virtual store and even after bagging both retailers, Harvey Norman supremo Gerry Harvey recently did an about face and launched an online version of his franchise chain a month ago.

The likes of Target, Coles and even Woolworth’s have been online for some time now, and although they claim it’s all part of their retail strategy mix, none would be drawn on whether online sales add to or take away from their overall bottom lines.

However, regardless of what is the real economic landscape, most of the retail experts all seem to agree that online shopping is growing. The only disagreements are how fast and what will be the final outcome to the retail industry.

For example, Jon Bird, CEO of specialist retail marketing agency IdeaWorks was quoted in a recent edition of Inside Retailing as saying that in 2011, “…will see more digital shoplifting, where consumers do their research in store, and then buy online…”

CEO of retail brand specialists Crossmark, Kevin Moore was even more blunt and said that, “This will undoubtedly be the year when we hit the tipping point and substantial amounts of product are purchased online and delivered to our doors. Not an incremental growth on last year or the year before, but a truly significant step change in volume…”

So what does this mean for retailers? Well if you believe all these figures, a lot of woe. And even more recent figures from research firm IBISWorld shows Australian online spending is set to grow by some 5.5 percent annually for the next five years, from $15.1 billion in 2007-08 to $21.2 billion during 2013-14. More worrying is that some pundit believe almost 70 percent of online purchases will come from outside Australia’s borders. Although the Australian Payments Clearing Association says that figure is closer to about 50 per cent. Taking the medium figure of 60 percent of that $21.2 billion of online sales, that gives you $12.72 billion in about three years’ time. In other words, that’s a lot of Pacific Peso’s going overseas.

Add to this the massive uptake of online shopping-friendly smartphones, iPads and other mobile devices and the scene is set for an economic Armageddon awaiting the bricks and mortar stores. Of course this won’t come about in one apocalyptic day – or even one year for that matter – but it will slowly increase over time until one day we will go to our local Westfield’s and find that half the stores are no longer there.

Not all stores will be able to go online, but if enough of them do, then the shopping mall will be finally consigned to the dustbin of history and most of our shopping will be from the privacy of our own lounge rooms.. While this scenario is sad for retailers, it’s great news for the environment, ISPs and computer programmers.

As for consumers, will this flurry of online commerce mean cheaper goods? Yes- in the beginning but just like every other market in history, supply and demand will dictate price. But best of all, we may no longer stress out for those rare vacant car spots at the local shopping mall.