12 Nov 2012

Shops face growing threat from online sellers

8:48 am on 12 November 2012

The retail sector's busiest trading period Christmas is underway but with more and more people choosing to shop online, particularly from overseas sites, there are grave concerns for the future of bricks and mortar shops.

Almost 2 million New Zealanders are expected to shop online this year, spending an estimated $3.2 billion.

A report from PricewaterhouseCoopers is picking that more than a third of that amount will be spent overseas, forecasting online sales to make up nearly 6% of the total $54.2 billion spent in the retail sector for the year.

Briscoe Group chief executive Rod Duke says for some sectors, such as the book and pre-recorded music businesses, it is a real threat.

Mr Duke says Briscoe Group does not operate in that space and if sportswear is being purchased offshore, it shows that Rebel Sport must be gaining significant market share in New Zealand.

He says Briscoe's online facility is trading at about the level of a provincial store and growing every day.

Tim Morris, director of market research firm Coriolis says retailers globally are going through a learning curve.

He says now that many people have ordered products online, buying globally is an option and a greater number of websites will sell and ship to New Zealand which has ramifications for people throughout the retail industry and the supply chain.

Mr Morris believes the impact of online shopping is a threat to retailers, though it is hard to measure accurately and appears relatively marginal to date.

"How much of the business that you're losing or the struggle that you're having out there is coming from the internet, and how much is coming from other New Zealand competitors is an unknown."

But Mr Morris says while the lure of cheaper purchases overseas are attractive, there is the added issue of GST, returns and shipping.

He thinks there will need to be a serious change in people's spending behaviour before it really starts to hurt retailers.