About a year ago I first broached the topic of the lack of digital investment by Australian retailers, and 1 year on it seems whilst we have progressed we are still falling further behind the digital 8 ball. This trend seems to ring true – particularly within the fashion sector whereby Australia is hemorrhaging online sales to overseas counterparts.
Online Australian Consumers Wont Wait For Fashion Retailers
According to stats released by the online retailers conference in Australia more than 45 per cent of all online retail sales are currently going offshore from Australia. This compares with just 14 per cent in 2005. And whilst fashion is not the only segment whereby Aussie retailers are missing out to overseas competition, it seems that international fashion retailers are actively pursuing Australian consumer $$$$ and are rubbing their hands together in the process.
According to a recent article in the Sydney Morning Herald, several British and US retailers have exploited the lack of investment in eCommerce fashion in Oz. In April, the British online designer boutique Asos.com listed Australia as its fourth-strongest international market behind the US Denmark and France and Net-a-Porter also lists Australia as ”one of its biggest international markets”. Whilst America’s Revolveclothing.com says Australia is its third biggest market outside the US.
It therefore seems Australian consumers have a healthy appetite for buying fashion online and are going abroad because of the lack of choice in the local market.
Can Clothing Retailers Afford Not To Do It?
Many Australian fashion retailers are still yet to realise the value in online retailing, however there are a select few that have made an investment in the space and are deriving significant value from their online stores. Witchery, for example, lists its online store as its fourth most profitable outlet, out of 80 stores nationally. And Mimco, which is owned by Witchery Holdings, ranks its online store as its 10th most successful, with turnover of about $90,000 a month.
However it is not only profitability and revenue that is delivering value for brands. Online stores have provided brands such as Guess and Sportsgirl with the ability to reach out to consumers in cities and towns that are not close by to bricks and mortar outlets;
Simon Nankervis, Managing Director of busbrands which owns the rights to Guess in Australia said about 80% of the sales within the past week have been from areas where Guess does not operate a retail location, and he wants it to stay that way. “This is being done by consumers where there is no retail location, such as the Northern Territory, or like in other parts of Western Australia as we only have one store in Perth.”
The Threat Of Inaction
Forrester Research predicts Australian online spending will grow to $32 billion by 2012, with further evidence to suggest that this could just be the beginning. Figures from IBISWorld show that online sales may eventually reach $75 billion as more retailers increase the efficiency and reliability of their online channels.
Fashion retailers need to realise that getting the right mix for success is not an easy task in the online world and fashion retailers need to be ramping up their online stores now to;
1) Gain a larger slice of the current consumer online fashion spend
2) Ensure that they are well established to capitalise on the future revenue opportunity which is presenting itself.
Inaction is not an option – if eCommerce and digital strategies do not become fashionable for Australian clothing retailers soon, the brands that do not move with the times maybe left behind like last seasons unpopular lines.
What are your thoughts on the lack of eCommerce investment by Australia’s fashion retailers?
Written By: Teresa Sperti
Article References
www.smartcompany.com.au/retail/20100217-fashion-brand-guess-opens-web-store-in-bid-to-expand-retail-reach.html+online+fashion+retailing+australia&cd=4&hl=en&ct=clnk&gl=au
http://www.smh.com.au/lifestyle/fashion/new-york-london-paris-prized-labels-just-a-click-away-20100515-v5j7.html
http://www.insideretailing.com.au/Latest/tabid/53/ID/8174/Aussie-retail-dollars-head-overseas.aspx
Agreed Teresa. I think there are 5 reasons why retailers just haven’t moved as quickly as they should have.
1. Retailers here are just not feeling enough pain yet to really do what’s necessary to succeed. Unfortunately for most of them, they will be feeling the pain too late and have lost such momentum and share of customer wallet that it will take an enormous effort just to catch back up.
2. Most retailers have no idea of the impact their sites have on in-store foot traffic and sales and so are allocating eCommerce budgets based on their online sales potential only. This is a naive view and limits the potential of their online initiatives to work hard for them.
3. Databases – most retailers still batch and blast emails to their databases. This is like throwing mud at a wall – some of it will stick (sales) but we have no idea which bits will stick or how often or for how long. The tools are there to deliver relevant and timely targetted communications that recognise the relationship between the customer and the retailer but most think there will just always be new customers to fill the pipeline. There won’t be.
4. Skills – many retailers have not embraced the skills required to drive eCommerce success. This is certainly due in prt to the fact that few exist in this marketplace ( you only need to look at the influx of guys and girls from the UK in the search marketplace to realise this). Retailers need digital marketing managers that understand numbers, analytics, merchandising, data, etc and many have simply not understood this yet.
5. Systems and technologies – the eCommerce technology market is highly fragmented with so many options available to retailers including open source, agency proprietary systems, enterprise level platforms, etc, it’s difficult to determine what level of investment is required in these to deliver a return that makes sense to the business. Having said that, I agree with you, doing nothing is simply not an option.
I have spent in excess of $1k on fashion/clothing this month between US, UK & AU online shops–this is a bit more than average for me but not unusual. I have also spent about $200 in store. Internet shopping is here to stay. It’s available 24-7 when I actually have the TIME to shop. I TRY to support the AU online shops that are available, but we are HUGELY behind the US & the UK. Nevertheless, I seek out AU boutique retailers who are running circles around DJs, Myer, etc….