IMPACT OF GLOBAL E-COMMERCE AND ONLINE RETAILING ON THE AUSTRALIAN RETAIL INDUSTRY

Presentation to the University of Wollongong, B Business Class on 10-Sep-2014

- Ash Gholkar

Retail Sector in Australia

•  The $329b retail sector employs over 1.5 million people, across a variety of business segments such as supermarkets, fast food, specialty stores, wholesale and logistics.

•  Retailers number over 77,000 currently and growing at 6% •  Retail spend $235b for the year to July 2014 •  Annual growth of 5.2% - amongst the best performing OECD

countries in the world •  Direct retail employs 1.2m which is 11% of Australia’s workforce

- 40% work Part Time •  Dominated by the two big retailers with annual sales to Jul-14:

–  Woolworths $61b –  Wesfarmers $55b (excludes industrial business revenue) –  Metcash $6.3b

• http://www.tradingeconomics.com/australia/retail-sales-annual • http://retailindustry.about.com/od/largestaustraliaretailers/a/2011-australian-largest-retail-comapnies-chains-stores-industry-supermarkets.htm

Source:

Online Retail in Australia

•  Almost entire population of 22m has access to the internet •  Online retail spend $15.6b for the year to July 2014 •  Represents 6.6% of traditional retail spend of $235b •  Domestic spending is about 75% of total online spending •  Annual growth of 8.6% compared to 20-30% in earlier years •  Online spending dominated by 35-44 year olds •  71% of online purchases in metro areas •  Average annual spend $2616 (2013) •  $142 average per order is more than anyone else in the world •  Purchases via mobiles over $5 million in 2013 •  Australia leads the world with the rate of new online businesses

opening • http://business.nab.com.au/wp-content/uploads/2014/09/nab-online-retail-sales-index-in-depth-report-july-2014.pdf • http://www.businessreviewaustralia.com/technology/1277/Amazon-Reports-on-the-Uptake-of-eCommerce-in-Australia

Source:

Key Drivers & Levers

•  Its about the Customer - Needs, Satisfaction, Loyalty

•  Convergence of social media and ecommerce - the power of social networking

•  Emerging technologies & ecommerce platforms e.g. Amazon Marketplace, Shopify, Group Buying –  SEO, Targeted Marketing, Single Identity

•  Evolving payment systems – fraud minimisation

•  Big Data – harvesting loyalty program information

•  Integrated supply chains – hub-node, drop ship

•  Building the Brand

Challenges to Traditional Retailers

•  Understanding the New Landscape •  Getting the Right People – news ideas, fresh

approach

•  Internal Reorganisation - Aligning KPIs and business expectations

•  Balancing Investment and Risk •  Cost of Doing Business – brick & mortar vs online

channels

•  Agile Supply Chains & Vendor arrangements •  Leveraging existing infrastructure & operations

The Future

•  Online Channels evolving to an Omni Channel Retail presence is a must for brick & mortar retailers to compete.

•  Pure Play Online Retailers will need to tweak their business models and brand positioning to continue offering ‘point of differentiation’.

•  As traditional retailers lift their game in ecommerce, there will be margin squeeze. Expect consolidation in the online retail space and alliances between traditional & online retailers.

Questions?

+61- 425 - 377572

+61- 2 - 80804320

ash.gholkar@gains5.com.au

ashgholkar

@ashgholkar

Gains5 Pty Ltd Suite 2.21, Delhi Corporate Park, 32 Delhi Road, North Ryde, NSW 2113, Sydney, Australia

Ash  Gholkar  Managing  Director  

THANK YOU

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