Online sales to accelerate

UK retail John Lewis expects Aussie retailers to accelerate their online sales

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published August 20, 2013 11:20 am AEST

That's the view of UK retailer John Lewis, which has just passed £1 billion ($1.7 billion) in online sales.

Simon Russell, director of retail operations development, says Australian internet retailing will accelerate rapidly. Mr Russell says the success of John Lewis comes from bringing together online, mobile and in-store retail channels – something Australian retailers have yet to fully exploit. Australian department store retailers David Jones Limited (ASX:DJS) and Myer Holdings (ASX:MYR) currently generate less than 1% of their sales online, compared to around 25% for John Lewis.

JB Hi-Fi Limited (ASX:JBH) is only slightly ahead of DJs and Myer, with just 1.6% of sales coming from its online store.

Mr Russell says they have free wi-fi in all John Lewis stores, and embrace shoppers using mobile phones to check prices and get further information. He has backed the Australian department stores to get online sales into the teens before too long, adding that online stores should be viewed as a component of the stores' whole offering rather than an alternative.

In a new report, professional services company Deloitte estimates that Australia's internet economy will grow at twice the rate of the economy, from $50 billion now to $70 billion in 2016. National Australia Bank (ASX:NAB) estimates that Australian online retail spending totalled around $13.9 billion, or 6.2% of total in-store spending, in the year to June 2013. But as more and more Australians become internet savvy, many are likely to increase their online shopping spend, helped along by retailers fine tuning their online offerings.

Foolish takeaway

Aussie retailers will be trying to capture some of the estimated $6 billion that Australian consumers spend on overseas online sites. The falling Aussie dollar should help as well, but retailers will be hoping that the government also lowers the $1,000 GST free threshold, so they can compete on the same level as offshore stores.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.

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