Roundup: World Wide Wrestle: Australian retailers beginning to adapt

Roundup: World Wide Wrestle: Australian retailers beginning toadapt by Xinhua Writer Christian Edwards and Fu Yunwei

SYDNEY, March 15 (Xinhua) -- As many bricks-and-mortar Australianretailers succumb to the new price-competitive, borderless tradingenvironment of the internet, research released today shows thatthere are key sectors showing both how to adapt and prosper.

Leading Australian retailers have spent the first quarter of 2011fighting a running, public battle with government and tech sectorsas the internet continues to change the national retail landscape.

Australian consumers have learnt lessons from the globalfinancial crisis, taking their new found frugality with growingconfidence to the online shopping world, and, according to IBISWorldGeneral Manager (Australia) Robert Bryant, many traditionaloperators have proven that nimbleness and innovation are the key tomaintaining relevance in the shifting marketplace.

According to Nielsen NetView, Australians use the web to shop athome-grown companies, with retail giants Woolworths and Wesfarmersleading the way, although the most popular site for Australianshoppers is eBay, which had 5.58 million unique visitors in January.

With large inventories, high rent, pricing and overheads, thepopular Australian department stores have long been expected tosuffer in the face of online retailing.

"The past five years has been difficult for many retailers,with... retail pegged to migrate more towards discounters,specialists and the internet; and the reverberating effects of theglobal financial crisis," Bryant said.

However, with department store revenue expected to increase by1.0 percent in 2010-11 to reach 21.33 billion U.S. dollars, andIBISWorld forecasting 1.6 percent average annual growth for the nextfive years, Bryant said the industry was far from "on its last legs"-- highlighting innovation and buying power as the key to theircontinuance.

"Big W -- which accounts for over 20 percent of industry revenue -- commenced online retailing during 2010, and other industryparticipants are expected to follow. The buying power and reputationof the companies in this industry will enable them to resonateonline, while the recent 300 million Australian dollars ( 298.95million U.S. dollars) investment by Myer into its flagship MelbourneCBD store is a vote of confidence in the ongoing relevance of theluxury in-store experience."

No industry has experienced the growth and change associated withthe internet as travel agency and booking. Agents were formerly thegatekeepers to travel providing full-service to customers from on-the-ground knowledge, bookings, and insurance.

Travel agents have faced significant challenges in the pastdecade as airlines and other travel operators made the move online,and began selling their products directly to consumers -- often atthe same prices they were offering travel agents.

To emphasize the necessity of innovation, one of the largestonline agencies, Expedia Australia Monday announced millions ofdollars investment on a new campaign highlighting the fact that,unlike other its competitors, it does not charge airline bookingfees. One observation is Both Expedia (and Zuji) dropped their airbooking fees in September 2009 with almost no impact on marketshare, according to web figures from internet metrics company,Hitwise.

Nicolas Chu, General Manager, Expedia Australia and New Zealand,said, "It takes time to build momentum" and that the company hasrecorded "very high double digit" growth in its business over thepast 18 months with innovation continuing to be the key.

Chu says consumer research shows there is nearly universal hatredamong Australian consumers -- 75 percent of them -- for bookingfees.

Alongside this kind of agility traditional agencies must alsocompete with resources such as travel review websites which haveessentially democratized the commerce of travel -- allowingconsumers to access libraries of non-biased, user-generated reviewson destinations and operators.

Despite this, Bryant said the industry's revenue has remainedlevel over the past five years at 3.85 billion Australian dollars(3.84 billion U.S. dollars), and IBISWorld is forecasting a lift fortravel agents in the next five years, expecting industry revenue toincrease at an annualised 1.8 percent.

"While the internet allows for swift bookings, the researchprocess can be time consuming and an experienced travel agent canoffer instant advice and guidance, which is reassuring for manycustomers."

Additionally, Bryant nodded to the growth of travel among olderAustralians, with plenty of free time and high levels of spendingpower, as propping up the industry, as the rate of internet usageamong this age group tends to be lower.

The research undermines the push by a reviled local retail lobbygroup, "The Retail Coalition" which includes major players Myer,David Jones and Harvey Norman, who last month called for the 1000Australian dollars (997.15 U.S. dollars) GST-free threshold foroverseas online sales to be lowered, blaming overseas websites forlost sales.

However, The move was a PR disaster with Australian consumersleaping on Twitter and Facebook to express their displeasure at theruse of having to pay more for buying from international websites.

What is certain, according to Bryant, is that online competitionis raising standards and bringing competitive benefits to bothconsumers and industry. "While many prophesied the death of cinema,human resources, travel agencies, and even department stores in theface of increased online competition -- what we have actually seenis resourceful operators repositioning their offering in order tocompete and flourish," Bryant said.