Out with the new… in with the old – a twist in Australian online shopping trends

November 23, 2012 / By

Online shopping is just one of a number of structural shifts currently occurring in the retail sector. Its potential impact on shopping centres is widely debated, with sometimes wildly varying views.

‘Click Frenzy’ was a widely publicised 24 hour online sale in Australia, offering significantly discounted products from over 150 retailers (both pure-play online retailers and multi-channel retailers). As an analyst of retail property markets I felt compelled to register and participate, for research purposes.

David Jones, one of Australia’s major department store retailers, chose not to participate. They held a similar flash sale on the same day, but were offering their discounts online and in-store, and should be commended for it. If retailers are to truly embrace a multi-channel sales approach (as many are claiming to) it seems logical to offer the same sale prices to customers who value the store ‘experience’ and support your physical presence and illogical to reward only your online customers by offering exclusive online discounts. Selling at discounted rates online seems to be an unsustainable strategy, as it cannibalises in-store sales.

In embarrassing fashion, neither website was able to cope with the huge volume of traffic. Both websites were unavailable for a number of hours. Given the public dissatisfaction and adverse media comment over this downtime, it seems reliability has been underestimated. We have now been reminded that consumers do not buy purely on the basis of price. Fortunately, physical stores don’t suffer from these reliability issues.

This experiment clearly failed, but lessons will have been learned. We can expect to see many more innovative ways to boost retail turnover in the future. Real estate will always play a crucial role in the retail process but landlords and tenants will need to work together and their interests are now closely aligned. In the case of the David Jones sale, they extended their trading hours to maximise the success of their campaign. This involved cooperation between the retailer, centre management and the landlord.

I expect it will take efforts on behalf of both landlords and retailers (as tenants), and most importantly, joint efforts, in order to effectively adapt to the changes underway in the retail sector. Those that can effectively and efficiently adapt will be rewarded, while those that cannot will face challenging conditions in the future.

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