Australians shift shopping priorities

Australians shift shopping prioritiesA new retail study based on underlying industry sales revenue data reveals bricks-and-mortar stores are stable but should focus on further integrating storefront and online channels.According to the BDO report, ‘Changing Tides: BDO Retail Market Update’, bricks-and-mortar retailers are starting to see more positive returns as they reduce or reverse sales declines.The report, based on data from IBISWorld, includes sales revenue growth figures from FY13 and FY14 and forecast figures for FY15 and FY16.”Fast fashion is set to hold particularly strong with revenue growth of 10.1 per cent in FY16, while [the toy sub-sector] is also expected to see solid positive revenue growth (2.3 per cent), an example perhaps of how retailers are ramping up efforts to improve their in-store offering to compete with online,” says BDO partner and retail specialist John Bresolin.Meanwhile, convenience stores are poised for “relatively solid positive growth” in FY16 following years of negative revenue, which, according to Bresolin, is “a sign that their ‘convenience’ differentiation from the supermarket giants appears to be yielding results”.”The data tells us we can expect competition to intensify as retailers continue evolving their offering to changing consumer demands, and it is increasingly pivotal for retailers to maintain a competitive online presence,” Bresolin says.”Traditional bricks-and-mortar retailers may need to focus less on the online/offline split and instead explore the integration of these channels.”Bricks-and-mortar toy retailers are also noted for their revival, shown “to be getting back on track, going from negative decline in previous years to modest yet steady positive growth in FY15 and onwards”.The report presages that fewer online retail sub-sectors will have “breakout years”, but acknowledges that “green shoots from the bricks-and-mortar space” show retailers have adapted to changed trading conditions in recent years.In the online space, BDO acknowledges the rise of retailers of household and family products, saying they are “set to be the emerging sector leaders as Australians shift their shopping priorities and the declining Australian dollar makes spending overseas less attractive”.The research shows an increase in spending by local consumers on items for their homes and children and identifies a “thriftier” approach to entertainment-based purchases.The report, which categorises retail sub-sectors according to revenue growth, says “despite the rise of omni-channel retail, e-commerce revenue is still growing at higher rates than bricks-and-mortar”, with online sales channels representing 19 of the top 20 sub-sectors and fast fashion being the only bricks-and-mortar inclusion. However, it also predicts online sales growth will “curb significantly over the next fiscal year”.”Online household furniture emerged as the top sub-sector overall, with the highest levels of forecasted revenue growth in both FY15 (up 20.1 per cent) and FY16 (up 16.2 per cent),” Bresolin says.”Looking forward, that sub-sector is set to be joined in the top six in FY15 by online baby products, online sporting apparel, online grocery, online books and online kitchen and diningware, demonstrating both a growing propensity to spend on the family and home, and to buy products on the internet that were traditionally bought in-store.”To download the report click here