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Online sales growth drives retail optimism

Retailers are predicting an almost 20 per cent increase in e-commerce for the year ahead, bringing online sales to represent around a third of total sales volume, according to the latest CommBank Retail Insights Report.

This growth online is being bolstered by mobile commerce, which retailers also expect to grow by a further 20 per cent in the coming year.

While retailers that operate only bricks-and-mortar stores reported the biggest confidence boost over the past six months, with 41 per cent of those surveyed predicting an improvement in business conditions in the year ahead – the highest proportion since the survey began in August 2015 – confidence has increased to some degree across all retail channels.

Forty-one per cent of online only, or pureplay, retailers have flagged better conditions ahead (up from 32 per cent in July 2017), and 44 per cent of multi-channel retailers expect the same (up from 38 per cent).

Seventy-six per cent of retailers are also forecasting stronger revenue over the next 12 months, with 43 per cent anticipating growth of 6 per cent or more. Of these, 18 per cent are aiming for growth of more than 10 per cent.

“It’s encouraging to see retailers’ view on future conditions surpassing previous highs seen in our first analysis of the sector in 2015,” Commonwealth Bank’s national manager of retail, Jerry Macey, said.

“This confidence appears to be underpinned by a healthy revenue outlook for most retail businesses and continued growth in online sales.”

Confidence by state, category

Confidence in all states and territories has increased, with a surge in optimism among West Australian retail businesses.

WA retailers experienced the greatest jump to rank as the most confident state, with 56 per cent now expecting conditions to improve over the next 12 months – compared to just 33 per cent a year ago.

In addition, retailers’ confidence has increased significantly in New South Wales with 42 per cent anticipating better conditions, up from 28 per cent.

While retailers across all categories experienced improved confidence, it is most pronounced for clothing and footwear retailers, with 40 per cent believing business conditions will improve in the year ahead, compared to 27 per cent in July 2017.

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