Seniors to drive online spending in the year ahead
Shoppers aged 70-plus will be the driving force behind online retail sales growth in the coming year, new research has revealed.
According to the latest addition of The Commonwealth Bank’s retail insights report, ‘pre-boomers’ (the parents of baby-boomers) will increase their online spend by 18 per cent over the next twelve months.
That’s nearly double the 10 per cent growth forecast for digital natives in Generation Z (16 -21) and more than triple the 5 per cent forecast for Generation Y (22-35).
Gen Y will still be the largest contributor to online sales at 34 per cent of purchases, but CBA’s retail industry national manager Jerry Macey, who spearheaded the research, said younger shoppers are reaching a saturation point online.
“As in previous surveys, the most confident businesses are those with multichannel retail strategies, allowing them to tap into the continuing growth in online and mobile sales,” Macey said. “Our research reveals much of that future growth is likely to be driven by older generations, with younger shoppers seemingly approaching saturation point online.”
Older shoppers on the other hand are just finding their feet in the digital world and benefit from deeper wallets, with Baby Boomers (51-70) forecasted to be making one-in-five online purchases online within twelve months.
The data is based on two online surveys, one of 506 decision makers at small, medium and large retailers and another of 1,531 shoppers, both carried out in July.
44 per cent of Pre-Boomers surveyed said better prices were driving them online, while respondents aged 51+ more broadly also cited convenience as an important factor.
Consumers still prefer stores, but pureplay remains confident
Overall though the vast majority of the 51+ group still prefer bricks-and-mortar, with 71 per cent of Baby Boomers and 76 per cent of Pre-Boomers indicating stores are still their preference.
In a further sign that online still hasn’t captured the hearts of most Australians, only 23 per cent of Gen Z respondents and 24 per cent of Gen Y respondents said they prefer online.
Despite that retailers surveyed expect online sales volume to grow by 24 per cent by July 2018, which could bring online transactions to one-in-three total purchases.
Consumers, 67 per cent of which said they purchased online in the last three months, are less optimistic, outlining an expectation that online sales will grow by just 9 per cent in the same period – although 37 per cent said they now make more than one-in-four purchases online.
Business confidence among pureplay retailers is stronger than among multi-channel and bricks-and-mortar traders though, with 32 per cent of online retailers surveyed expecting conditions to improve over the next twelve months, 57 per cent anticipating similar conditions and 11 per cent predicting a decline.
In contrast, 38 per cent of multi-channel retailers expect an improvement, 43 per cent anticipate similar conditions and 19 per cent see a decline on the horizon; while 17 per cent of bricks-and-mortar retailers expect improvement, 59 per cent think things will stay the same and 24 per cent anticipate decline.
CBA said growth in online spend among older shoppers was coinciding favourably with adoption of mobile shopping, with share of mobile purchases among Baby Boomers forecasted to grow three-times as quickly (11 per cent) as Gen Y (3 per cent).
M-commerce currently represents 26 per cent of online sales on CBA’s numbers, but retailers surveyed expect that to increase to 36 per cent in twelve months.
61 per cent of retailers said mobile payment options is among their top five priorities over the next twelve months, while 63 per cent of consumers said this was an expectation.
About the surveys
Within the 1,531 shoppers surveyed online by CBA in July 223 were Gen Z (16-21), 315 were Gen Y (22-35), 335 were Gen X (36-50), 330 were Baby Boomers (51-70), and 328 were Pre-Boomers (70+).
Consumer data was weighted to derive a nationally representative data-set.
The 506 retailers surveyed ranged from decision makers at businesses with turnover’s less than $1 million to over $500 million in four key sectors: food & liquor, clothing & footwear, homewares & hardware and other retail.
ACA research conducted the surveys on behalf of The Commonwealth Bank.