Bricks and mortar retailers told to get online quickly

Stuart Corner
Monday, 24 October 2011 07:44

IT Industry - Strategy

Australia's traditional retailers have been told to move quickly into the online world before consumers develop loyalty to the much more nimble new players.

According to Deloitte's national technology, media and telecommunications leader, Damien Tampling, some of Australia's most successful, fast moving startups at the moment are online retailers, and with Australia's total online retail sales expected to reach $33.3bn in 2015 - double the 2009 figure - traditional Aussie retailers need to move faster to take a position in this growing space, before consumers align themselves to new, online-only brands.

Tampling said: "Whilst local online sales represented four percent of all retail activity in Australia last year, there was another half again going to online businesses offshore. This means traditional retailers are getting disrupted in certain categories by both local startups and more established offshore players."

He added: "Traditional retailers must realise that in this new world they may well require a new brand and a new model that leverages their strengths, but operates independently. Our Aussie retailers can't take a 'wait and see' approach on this one as they are already getting left behind."

He suggested that: "A rapid small, but still meaningful investment in the space is better than waiting for a perfect model that fully integrates with the supply chain, franchise model or in-store POS."

"There's no doubt that competition will become more aggressive, and we are likely to see more players acquiring or merging to gain scale, grow or survive. So big retail must move quickly to develop and deploy a strategy that allows them to at least be in the market in a meaningful way."

Tampling cites Grays Online, Catch of the Day and Ozsale, as successful examples of the new breed of online retailer. "[All] have been courted by venture capital style investors over the last 24 months. They saw the potential and moved quickly. The result was that two of them have taken money from offshore investors who have seen the online retail potential unfold elsewhere in the world'¦And there wasn't a traditional retailer in sight."

He notes that, in the last few weeks, Grays Online and eBay have both indicated they would be extending their current online offering into the fashion niche, putting further pressure on traditional retailers.
 
"We advise any organisation looking to play in the online retail space to invest in the following five areas: develop a focused product strategy and roadmap identifying which products you will start with online and why, and determining how your offering will evolve; think through the best inventory management model; create a plan for how the business will engage with suppliers; determine a business model that can move quickly and innovate constantly.