E-commerce channels growing at five times the rate of ‘bricks and mortar' - IRI

E-commerce channels growing at five times the rate of ‘bricks and mortar' - IRI

E-commerce channels growing at five times the rate of ‘bricks and mortar' - IRI

May 02, 2022

Online retail business is now a $42.46 billion dollar a year business, according to the Australian Bureau of Statistics with e-commerce channels growing a five times the pace as ‘bricks and mortar stores” and with online penetration sitting at 11.4 per cent.

IRI’s On The Pulse presentation in March examined the future of e-retail and Channel Insights Manager, Daniel Bone, said that COVID had proved a breakthrough for online shopping with 64.8 per cent of households now shopping online. Of that population, 39 per cent adopted – and adapted – to online shopping in this past year.

He said that in the “online shopping universe”, it is families, particularly young families, that are making the biggest contribution to channel growth. Households with kids are 11.3 per cent more likely to shop online than households without.

Citing the UK as an indicator of where Australian consumer habits are likely headed, he said that the average online basket there is now more than double the size of in-store baskets.  The UK now has 200 dark stores and 25 per cent of all retail sales are now made online.

As Australia has started to open up again, an increase in “mobility has led to a pronounced drop off and levelling out in online sales”. He said that a physical store presence is still a hugely important aspect of online store success for most retailers.

To stand out online, Mr Bone suggested that suppliers need to:

  • collaborate more closely with retailers,
  • continue to invest in omnichannel capabilities
  • identify opportunities to accelerate visits to their online channels, like promoting occasions, events and increasing personalisation.

The case for collaboration is supported by the fact that retailers continue to build KPIs for producers relating to their e-commerce capabilities. As such, businesses need to invest more and execute their online presence more strongly.

Mr Bone suggested that the mechanics of delivery are crucial in creating a point of difference and suggested that in Australia we will continue to see the rise of q-commerce – quick commerce – and the emergence of new delivery models that meet demand for “instant gratification”. Milk Run – the ten minute delivery service– is a perfect example or Endeavour Group’s BWS that offers a one-hour delivery guarantee.

Mr Bone cited Coles Group for its “quick commerce, rapid delivery” fulfilment offering with 60 per cent of online consumers opting for delivery and 40 per cent offer for click & collect which “fuses the physical and digital into a single transaction”.

In the q-commerce space, Mr Bone said we are likely to see a myriad of new start ups which will likely become consolidated as they are acquired by larger retailers. We are also likely to see technology play a bigger part in delivery, such as an increase in the use of drones.

The full IRi webinar is available here.

IRI is an Associate Member of the Drinks Association.

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