Will online sales really deliver festive growth?

in Growing by Anthony Fensom
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festive growth

Gerry Harvey famously described online sales as “spin”, and it seems many other Australian retailers agree.

In a recent survey by accounting group Deloitte, 65 per cent of respondents forecast online to generate less than 2 per cent of their festive sales in 2012, even though two-thirds expect higher sales this festive period.

By contrast, 73 per cent anticipate increasing their physical store footprints through either more stores or increased floor space. One-third of those polled expect new stores to be the most significant driver of sales growth in the year ahead and not the much-hyped multiple ‘omni’ channels.

The Harvey Norman chairman and founder told the Sydney Morning Herald’s BusinessDay in August 2012 that online was generating only 1 per cent of his company’s sales.

Retailers had been forced to promote their omni-channel approach to avoid being labelled as out of step with the market, he asserted.

“Everyone does it,” he said, “but then when you check with Myer or David Jones, JB Hi-Fi, Good Guys, it’s nothing of their sales, somewhere between half and one-and-half per cent.”

Harvey said consumers researching his company’s products online had jumped 25 per cent, but sales had not risen amid the toughest retail environment in 25 years.

Yet despite Harvey’s pessimism, the Deloitte survey found expectations of continued growth in online sales. Nearly three-quarters of respondents forecast more than 10 per cent growth in such sales over the year ahead, with a third saying online offerings and new sales channels were key strategic priorities.

Given the debate over the value of online sales versus traditional physical outlets, how can retailers generate some holiday cheer for their businesses?

Get ready for peak periods

Bricks-and-mortar retailers can expect the biggest shopping boost during the three-day period from December 20, while the “hot” period for online sales is the four days from December 7, according to a Commonwealth Bank survey.

The survey of 1030 Australian business owners found that physical stores would generate some 70 per cent, or $5.5 billion, of total holiday season sales, with online accounting for the remainder.

Depending on the type of business, it is important to have sufficient staff or website capacity as well as supplies available for the peak periods. Ensure there is a process for last-minute orders, including confirming the availability of stock and monitoring payment and delivery, such as sending automated alerts of any delays. This will ensure that customer expectations are met and any dreaded consumer backlash is avoided.

Prepare your business for all-comers


Despite Harvey’s criticisms, consumers are increasingly researching products online and the omni-channel approach can pay dividends in securing sales. This includes having a mobile-friendly website for your business along with other channel integration to facilitate cross-channel shopping behaviour.

According to a survey by Monash University’s Australian Centre for Retail Studies (ACRS), respondents on average conduct four stages of research before making a purchase, with more than 70 per cent experiencing barriers such as unhelpful staff, products being out of stock or technological failures.

“Shoppers who experienced multiple barriers were over a third less likely to eventually make a purchase,” ACRS’s Jason Pallant said. “Becoming a successful omni-channel retailer requires the removal of these barriers through seamless integration of the various channels and this integration can often require a shift in organisational processes or structures.”

While bricks and mortar may still generate the bulk of retail sales, it appears a bright future is in store for those prepared to embrace the digital age. Can your business afford to ignore the 30 per cent of holiday sales coming from online this year?


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Festive pricing: Go low and other strategies

Related Keywords : Growing , Festive Season
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Anthony Fensom

Anthony is a communication consultant at BWH Communication and a freelance writer with 15 years' experience in the stockbroking and media industries of Australia and Asia. He is a regular writer on business and other issues for publications in Australia and Japan. He consults on communication strategy to businesses ranging from private enterprises to professional service firms and publicly listed companies, with a particular interest in entrepreneurship in all its forms.

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