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More online retailers tipped to open stores

One in five Aussie e-tailers are planning to open physical stores by early 2017, according to the Commonwealth Bank Retail Insights Report. 

The report reveals 18 per cent of online-only retailers are planning to establish a physical outlet in the year ahead, up from 13 per cent in the previous half yearly report, and over three quarters of retail businesses will have a physical presence.

“Bricks and mortar and multichannel retailers are doing more online as customer preferences evolve. At the same time, emboldened digital retailers are opening physical stores to complement and drive further online sales,” said Jerry Macey, Commonwealth Bank’s national manager retail.

“We have seen large online retailers such as Amazon unveil physical stores in the US and this trend is expected to strengthen over the year ahead with almost one in five pure play online retailers planning a bricks and mortar outlet by early 2017,” said Macey.

Last month, the acquisition of pure play online retailer One Kings Lane by Bed Bath & Beyond, prompted digital insights firm L2 to declare an online-only strategy doesn’t work.

“Simply put, Amazon’s low cost and fast delivery options have made it too expensive for any brand to compete with an online only model,” said Claude de Jocas, L2’s VP of beauty.

In January L2 released the ominously-titled report The Death of Pure Play Retail, outlining issues facing online-only retailers – unsustainable customer acquisition and shipping costs and a discount-driven environment that further erodes razor thin margins.

However, Australian pure play retailers don’t seem to be worried. According to the Commonwealth Bank report, online-only retailers are more upbeat than their omnichannel counterparts.

In terms of outlook, the report shows pure play online retailers are significantly more optimistic than their multichannel peers, with 46 per cent expecting an improvement in conditions, compared to just 28 per cent among multichannel businesses.

When looking at the drivers behind the outlook for retailers, for those expecting a decline, 95 per cent attribute it to economic factors. Conversely, for retailers indicating an improvement in business conditions, 71 per cent attribute it to internal factors such as business growth and the introduction of new products.

“Our research shows the most optimistic retailers are those who have taken control of their own destiny, rather than looking to external economic conditions to drive sales growth,” Macey said.

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