As people conduct more and more of their lives online and the world progressively moves towards being “all digital,” the retail industry is undergoing a significant change.
Consumers are increasingly looking for low prices for top quality goods, and online retailers–able to save on the costs of expensive prime rental locations and sales staff–are meeting this demand.
The growing digitalization of media such as music, books and films plays into this need, and together, these factors are helping to redefine the retail landscape.
In 2012, the overall music market in Australia grew by 4 per cent at wholesale level. Over the same period, digital music sales increased by 31 per cent. Sales of physical music fell by 12 per cent*, a figure that is consistent with its average annual decline of 13 per cent over the past five years.
Based on this trend, the market share of physical music, which was nearly 100 per cent in 2005, will drop to well under 50 per cent in 2013.
The digitalization of music is just one aspect of the changing retail industry in Australia. Consumers seeking lower prices, wider choices and the convenience of shopping from any location are feeding a growing online presence of a diverse range of retailers.
A PwC and Frost & Sullivan report that summarizes the state of the retail industry in Australia can be found here.
Some of its main findings include:
• Online shopping in Australia accounts for 6.3% of total retail sales of $254 billion, of which approximately 45 per cent are made on offshore websites ($7 billion)
• The online retail category is expected to grow by 14 per cent per annum in the 2013-2016 period
• Retail categories that are predicted to display the strongest growth over the next five years include clothing, footwear, jewellery and fashion
• Lower prices are the key driver for shopping online
It will be interesting to see which brick and mortar retailers adapt successfully to these online challenges. To hear Roger Montgomery’s views on the retail industry in Australia, and how traditional vendors might respond, click here.
*Source: Australian Record Industry Association (ARIA)