“E-Commerce Will be Essential to Brand Survival” – Retailers Discuss the Future

Power Retail By Power Retail | 11 May 2020

Will online become the forefront of retail after lockdown? Is this an opportunity for blurring the lines between physical and online channels? We ask the experts to weigh in on the future of retail. 

Online retail has gone through a seismic shift in the last three months, to the point where it has been compared to the dotcom boom of 2010. Shoppers who have never touched e-commerce are now turning to it as the only source of retail during lockdown and isolation.

The Change in Consumer Behaviour

As online retail continues to boom in Australia, the change in consumer behaviour may have long-lasting effects on the retail industry. “While online shopping has been steadily gaining market share, particularly since Amazon established roots in Australia, Coronavirus has forced a whole new wave of shoppers online that are unlikely to go back to their previous buying habits,” says Dean Taylor, the Founder and CEO of Windepot. “E-commerce will be essential to brand survival.”

The wine industry may never return to normal, thanks to this online flourish. “With the upheaval to ‘business-as-usual’ caused by COVID-19, many wineries are waking up to the realisation that their most profitable sales channel, Direct-to-consumer online, has largely been neglected,” Taylor tells Power Retail. “Not only does DTC cut out expensive third-party retailers, wholesalers, or other middlemen, but it also provides greater opportunity to increase the lifetime value of a customer.”

The Fear of Online is Slipping Away

What about after the restrictions have lifted? While many customers who prefer the physical aspect of shopping will return to brick-and-mortar, trends show that e-commerce may become stronger than ever before.

“Whether it be because of fears around the security of online transactions, or simply an ingrained preference to shopping in-store, a percentage of the population has always been resistant, or completely opposed to, online shopping,” Mitchell Kelly, the Director of Pathfinder Alliance, tells Power Retail. “This is particularly true of older generations. While a percentage of these individuals may return to their old behaviours post-COVID, it’s very likely that for a large number, these new behaviours will persist.”

In 2010, the dotcom boom saw a significant change in attitudes towards e-commerce and online shopping. While it has taken another decade, the levels of trust for online shopping has increased. In March this year, online revenue was up 19 percent than predicted by the Power Retail team. While these numbers have started to decrease in the last few weeks, April’s e-commerce sales in Australia were up more than 50 percent than the previous year.

“Simply put, e-commerce and people’s attitude to purchasing online will forever be shaped by habits built throughout the COVID-19 period,” David Pagotto, Founder and MD of SIXGUN, tells Power Retail. “People are becoming climatised to making online purchases for things that perhaps they would have preferred to purchase in person previously.”

Will Customers Want to Shop Outside?

As restrictions begin to loosen across the country, it opens the doors for retail once again (in the literal and figurative sense). However, even if the doors are open for customers, will they want to continue to shop surrounded by others?

“People might be a little more cautious and conscious about health and safety which will affect many industries but more significantly there might be some discussion about whether more people will shop online,” explains Dean Salakas, the CEO of The Party People.

“I don’t necessarily think this is a true statement,” Salakas says. “What I think is more likely is that the timeline for adoption of shopping online has been pulled forward. People who had never considered shopping online may have done so during COVID-19, found it easier than they expected and adopted it as the new norm.”

The online growth wasn’t something that was a massive surprise to many retailers, as Dean Salakas continues. “That was always going to happen; I think it’s just pulled the timeline forward for the saturation point of online shopping vs bricks and mortar shopping by 5-10 years,” he says.

Even if online retail becomes one of the most popular channels, for the time being, there will always be customers who prefer brick and mortar. “Online currently was 9-10 percent of all retail sales and will probably jump to 15 percent,” Salakas tells Power Retail. “But in my view, it’s getting closer to being close to its peak. I don’t think we will ever see 100 percent of retail going online in the next 100 years, but I can see it getting up to 25 percent.”

The Big Picture

It’s borderline impossible to predict how long this online boom will last. However, it’s safe to say that online has experienced unprecedented growth in the last few weeks due to COVID-19. So, what may happen in the future?

“After stay-at-home restrictions are eased, and businesses are able to reopen, what we’ll have is a greater number of people comfortable and familiar with shopping online,” says George Hartley, the Founder and CEO of Smart Retail.  “When you couple this with a number of bricks and mortar retailers having to close permanently due to costs such as rent that don’t apply in e-commerce, what you’ll see is a permanent boost for e-commerce over bricks and mortar retailers.”

Power Retail is dedicated to providing critical and live e-commerce retailer benchmarking data and shopper insights for the online retail industry. Click here to find out more about Power Retail E-Commerce Intelligence or here to sign-up for the free weekly Pulse Newsletter for more essential online retail content.

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