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Online retailing gathers pace

Online retailing is growing at an impressive pace that will affect property investments.

Bayleys research says online shopping is expected to reach $3.2 billion in 2012.

This will be 5.9% of the country’s total retail bill for the year, according to the Price Waterhouse Coopers report, Australian and New Zealand Online Shopping Market and Digital Insights.

An expected compound annual growth rate of 14.3% means about $5.4 billion is expected to be spent online by New Zealanders in 2016.

The key difference for in-store retailing is instant access and use of the product when purchased, whereas there is a delay when buying online.

“While online retailers are experiencing a great amount of attention at the moment, they will be unlikely to spell the end of all traditional retailers, because of the one thing they can’t offer – personal experience,” Bayleys says.

At the same time, the most common reason for people shopping online, instead of in store, is that prices are generally lower.

This has prompted a trend known as showrooming, whereby the consumer will go into a store, try out or try on a particular product, make a decision about which product to buy and then go home and buy it online, or by using their mobile phone.

This means retail stores are competing directly with their online counterparts and may take just-in-time stock management to a new level.

More retailers will be expected by the consumer to have both a physical and an online retail presence, Bayleys says.

A method of attracting shoppers to stores is to offer online sales that can be picked up at the store.

British department store John Lewis does this. It had become really popular “and it is something that New Zealand stores are going to need to get on board with to maintain a competitive edge”.

More by Chris Hutching for NBR NZ Property Investor

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