New Zealand retailers falling behind in online sales

Wednesday, 9 August 2017

Online spending growth is more than double that of local brick-and-mortar stores, which were only up 4 per cent on June last year.

International online sales could soon overtake brick and mortar retailers as Kiwis continue to shop more online.

Figures from Marketview and BNZ found total online spending was up 10 per cent on June last year, with 45 per cent of all sales going overseas.

Storbie chief executive Shane Bartle says online shopping is forcing larger retailers to change their business models.

International sales were up 13 per cent, compared to a 9 per cent rise in local online spending.

Retailers are struggling to attract shoppers as international spending creeps up.

Kiwis are increasingly preferring to buy goods from overseas, with spending on electronics up 22 per cent on June last year.

First Retail managing director Chris Wilkinson says Amazon will provide an international market for some Kiwi retailers.

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Storbie online market boss Shane Bartle said many New Zealand retailers were trying to catch up with international competitors by focusing heavily on their websites.

'The key areas where New Zealand retailers can beat their international alternatives are in the areas of touch, trust and comfort. The ability to see online and then go and check it out in store,' he said.

'Smaller retailers are beginning to consider e-commerce business models such as click-and-collect and same-day delivery to compete with overseas competitors.'

Retail NZ general manager Greg Harford said it was unlikely international online sales would overtake brick-and-mortar anytime soon.

'But it's certainly true that international online sales will overtake New Zealand online sales within the next couple of years,' he said.

'In 2012, New Zealand firms had a 66 per cent share of online shopping by Kiwis, but that's down to 54 per cent now.

'Online shopping is still a relatively small proportion of overall retail spending, roughtly 4.5 per cent, but it is certainly growing fast.'

First Retail managing director Chris Wilkinson said Amazon was a looming threat, but was not the death knell for Kiwi retail.

'Amazon has really polarised the [retail] sector,' he said.

While many retailers would have to compete with the online giant which has confirmed plans for a warehouse in Melbourne, others may use the marketplace as a gateway into international markets, Wilkinson said.

'They're looking for solutions rapidly, but for New Zealand business trying to sell a commodity product it's almost impossible to compete on price.

'Immediacy, convenience and identifying strongly with a brand are the only ways to compete. You have to create an aspiration offer.'

Shopping strips and malls were using food and experiences to draw in shoppers on a more regular basis, he said.

Retailers have argued foreign firms should charge GST on purchases Kiwis made on their overseas websites, to create a level-playing field.

Marketview analyst Michael Stechman said there was no doubt international spending was growing faster than domestic.

'A couple of months earlier in the year both were tracking similarly and domestic online is still the preferred option, 55.5 per cent of online, but that domestic-international split is creeping closer and closer to 50-50.'

Shoppers may hold off a week for better exchange rates on expensive items, but changes in rates rarely stopped people buying, he said.

New Zealanders also have a growing appetite for buying food and alcohol online, with spending on groceries and liquor up 21 per cent.

Electronics increased by 22 per cent, clothing and footwear 11 per cent, and furniture 3 per cent.