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Consumers shift on line

21 Jul 2021 2 month(s) ago

Lockdowns have meant big boosts in online spending, but the rate of growth is slowing.

Unsurprisingly, the lockdowns in Australia have increased web traffic at the expense of foot traffic in Australia’s retail industry. A huge shift is occurring because of the pandemic, but it remains to be seen if this will be cemented in the long term.

According to Jarden, the rate of increase in web traffic is slowing. It web grew by 9% y/y in June vs. +20% y/y for the prior three months and +54% for the year. Trends improved modestly vs. May (+7%), reflecting the impact of snap lockdowns across Australia but not enough to offset footfall, which declined c11% on average through June (Shoppertrak).

Spending in NSW spending slowed to 2.9% above 2019 levels when the lockdowns hit, down from 11.1% two weeks earlier, with eating and drinking out, clothing and recreation seeing the largest falls.

“Web traffic performance by category was similar, with meal-kits, soft-fashion and travel recording the largest slowing versus the prior quarter, while food recorded the largest improvement (+13% y/y). Household goods and department stores both fell y/y in June.

“By brand City Chic, Coles, Amazon.com.au (prime days), Kmart and BCF were the strongest. Weakest brands were Catch, Harvey Norman and Kogan of the listed players. More recently in July, traffic has remained relatively muted, with ex-food seeing no material uptick despite stricter lockdowns in NSW.”

The report notes that brand loyalty is tends to be low online, but there are opportunities. “Brand trust and data collection have increased through COVID, putting brands in a unique position, whereby they are trusted more and know more about the shopper. This, in our view, creates an opportunity to expand into 'right to play' categories and lift loyalty (per Wesfarmers).

“By retailer Apple, Bunnings, Woolworths and eBay have the highest loyalty across respective categories, while The Good Guys, Catch, Home Hardware and IGA have the lowest. Looking forward, we see a material opportunity for retailers to lift online loyalty through range, targeted offers and adopting a true pull model.

"In our view Wesfarmers, Woolworths, Super Retail Group and Amazon are best positioned, albeit Woolworths seems to be the retailer executing best here. JB Hi-Fi and Harvey Norman are, in our view, less favorably positioned."

Here are the financial metrics:

 

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