Why retailers have no idea about the future
Friday, May 10, 2019/
A recent report from Australia Post claims that by 2030, nearly half (49%) of retail will be online.
I think Australia Post is being a little cheeky with this press release. In fact, the results are starkly different from another Australia Post report, which shows online retail is 8% of all retail sales, and that in the year prior, it was 7%.
Online retail appears to be growing at 1% per year, and slightly slowing down, not accelerating, so the data would suggest that by 2030, it will be less than 20% of all sales, not 49%.
I have read a few reports with online retail statistics and — with the exception of Australia Post’s latest report — all say online retail is less than 12% of all retail. In the USA, online retail is 13%, which is interesting, because the US market is often reported as a much more mature market than Australia.
Still, the percentage is much lower than what people think.
So why the difference?
Well, in the recent report from Australia Post, they surveyed 1,000 businesses, meaning the report is based on opinion.
Clearly, there is a disconnect between how much businesses think is being sold online, to what is actually being sold online.
It’s a classic case of perception differing from reality.
It’s alarming to think businesses don’t seem to understand their own industry. The survey is misleading and could be damaging if businesses believe it.
I mean, based on the survey alone, 50% of retail stores should close. If I was investing in property, this data would affect my interest in retail real estate versus residential opportunities. This report is dangerous!
There are some statistics that suggest 90% of all retail purchases start online, so I am not suggesting an online presence is not critical to business survival — but I am suggesting bricks-and-mortar is an important strategy.
Personally, I am looking to open more stores, because the data suggests that for the foreseeable future, bricks-and-mortar is king.
We are seeing purely online business, such as Amazon, move to bricks-and-mortar, and other Australian retailers, such as Catch Of The Day, open stores as well. So it would seem I am not the only one that sees the importance of bricks-and-mortar to an overall retail strategy.
Unless something disrupts online to make it accelerate, we won’t even reach 50% of spending online by 2050, let alone 2030.
Amazon was supposed to have a big impact and accelerate this trend, but that doesn’t appear to be the case. Faster internet, like 5G, might have some impact, but again, the introduction of 4G didn’t move the statistics significantly, so I can’t see how 5G will make a big enough impact.
I mean, we went from 0% to 8% in 25 years of online retail. I can’t see this figure jumping six times that in 10 years — and the data agrees with me.
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