Our online shopping love affair is showing signs of maturing, says Middletons Securities

As the Nation braces itself for an onslaught of pre-Christmas sales and traditional Boxing Day spending sprees, there is every reason for Australia’s traditional retailers to be confident, says Middletons Securities.

Middletons Securities spokesman, Mr David Middleton, said early signs suggested a turnaround in the fortunes of traditional retailsense as our fascination for online shopping starts to reach maturity.

“Since the GFC the consumer has largely gone missing, and as economies have slowed and the focus shifted from debt-fuelled consumption to battening down the hatches we have seen traditional retailing under threat from online retailers,” Mr Middleton said.

“However, as our economy becomes more accommodating, and as the level of employment improves, and net wealth begins to grow again, we can expect the Australian consumer to feel more confident,’ he said.

“In the past, traditional retailers have been challenged by the growth of online shopping, but as we lead into the busiest retail spending period of the year we can expect consumers have already made clear and decisive choices as to what they will buy online and what they won’t – especially when it comes to putting their trust in an overseas seller.”

Mr Middleton said traditional retailers have risen to the challenge. The majority of e-commerce activity in Australia now involves transactions between consumers and Australian – rather than international - businesses, reflecting a settling of buyer behaviour.

“Security remains a key area of concern for buyers, who want to know they can trust a site to receive their goods, that what they are buying will be a quality item, and their credit card details are safe, while sellers want to have trust in that they are not being defrauded and left out of pocket,” Mr Middleton said.

“On the back of those key purchase concerns, a growing number of Australian businesses have focussed on selling their products online but offering the convenience of store-pick-ups, or showcasing items and publishing stock levels online,” he said.

“This approach allows consumers to still have the convenience of shopping from work or home, but overcomes the huge postage cost that is often a major deterrent from online buying and selling activity.”

Further consolidation is expected in the online retail sector during 2015, and while Australia’s online retail spending increased to $16.19 billion for the year to October 2014, it still represents only around 6.8% of traditional retail spending.

“The share of domestic spending continues to edge higher and now represents 75.2% of our total online spending, and recent online growth has been far more subdued than the 20-30% growth rates that have been recorded in earlier years,” Mr Middleton said.

“We expect Australia retailers will be switched on to this stabilised participation in online shopping amongst consumers, and aggressively promote the benefits of shopping with a trusted local businesses, go to great lengths to demonstrate the customer service and advice that is missing from online buying, and ensure the delivery of quality products to the marketplace at competitive prices.”

About Middletons Securities

With its offices located in Adelaide, Middletons Securities is an authorised representative of Lonsdale Financial Group Limited and advises corporations, organisations and individuals in a comprehensive manner, including direct equities, managed funds, superannuation and insurance products.