Domestic retailers still control online game

Domestic retailers still control online game

Management consultant, A.T. Kearney claims the Australian supermarket duopoly will eventually come under attack from pure-play online retailers and packaged goods suppliers.

Reported in yesterday’s AFR, A.T. Kearney’s global consumer and retail consultant Michael Brown was quoted as saying: “What Woolworths and Coles offer is the convenience of the one-stop shop, but if online players start to siphon off pet care, heath and beauty… the more that gets siphoned off, the one-stop shop is not as important.”

Online grocery and liquor sales represents about 15 per cent of the Australian market, however, we understand the grocery component accounts for just 2 per cent. Online grocery-only sales in the US is 8 per cent, and 12 per cent in the UK.

A.T. Kearney expects online grocery sales to eventually reach 20 per cent.

Online has already taken 34 per cent of the department and variety stores category, 17 per cent of the homewares and appliances category, and 12 per cent of the media category. Online spending in Australia approximates $15 billion per annum, which is about 6.5 per cent of the traditional retail market.

However, A.T. Kearney’s findings should be taken with a grain of salt: according to NAB, it’s the domestic retail giants (read: Coles and Woolies) that are continuing to dominate the market, controlling about 74 per cent of total online sales.

MORE BY DavidINVEST WITH MONTGOMERY

Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.