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With fast internet, reliable technology and a strong dollar, Australians are increasingly shopping online, a topic that continues to dominate the news; especially in the context of international e-commerce sites trumping local retailers.

However, recent data from a Commonwealth Bank study points towards an emerging shift of Australian stores starting to gain back market share from international competitors.

The CBA study, created by retail analysts Andrew McLennan and Sam Teeger, reveals that domestic Australian retail now accounts for 60% of all sales, up from 55% last year. Ultimately, this means that not only are domestic retailers taking the larger percentage of all sales, they are also progressively increasing this market share.

What's changed?

Online domestic retail has grown 40% since last year, more than double that of international retail, which saw only a 17% increase in online sales growth.

CommSec's chief economist Craig James suggests the reason for this growth is that local suppliers are finally starting to satisfy the needs of Australian consumers. James believes this trend will "gain traction" over the next year, but is quick to point out that domestic retailers will need to work hard to keep these consumers long term.

The higher Australian dollar is making it more attractive to purchase goods directly from overseas. The conservative nature of Australian consumers and the ongoing shift to online spending will continue to hurt traditional retailers. Domestic store retailers will need to continue discounting in the current climate in order to entice customers.

It isn't just domestic retailers that are making headway in the latest round of data, the CBA study also shows traditional 'bricks and mortar' stores making a comeback against pure-play online retailers. How? By diversifying their channels and becoming multichannel.

It seems traditional retailers are increasingly understanding the need to have both a physical and online presence in order to succeed - and nearly all of the big players in retail have invested heavily in an attempt to enhance the shopping experience for their consumers. Myer, David Jones, Woolworthes, Coles: Consider most Australian retailers and the chances are that they have invested heavily in developing a greater online presence during the last twelve months.

This diversification into the online space, while still maintaining a traditional 'bricks and mortar store', seems to be working and James points to this being a positive sign for the future of retail.

This may be an early sign that the international trend of traditional 'bricks and mortar' retailers dominating the online channel is playing out in Australia. The online retail channel remains a significant issue for Australian retailers, but the latest trend suggests the local industry is finally adapting. This should be comforting for the many retailers who now have online as a strategic goal.

Going forward

Overall, online retail growth in Australia is still increasing steadily as the market continues to mature. In the past year, 76% of Commonwealth Bank cardholders purchased from an online pure-play retailer at least once, which is up from 62% previously and the number of CBA customers consuming online also grew 25% in the same time.

It is clear that online shopping is only growing in popularity, so the question for the next twelve months is whether Australian 'bricks and mortar' retailers can maintain this fight for online market share?

[Image credit: danielbroche]

Claire Brinkley

Published 15 October, 2012 by Claire Brinkley

Claire Brinkley is Econsultancy Australia's news and insight reporter. Follow her on Twitter, Google+ or connect with her on LinkedIn

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