Uptick in clicks

Online shopping and the world of e-Commerce was well-entrenched in New Zealand pre-COVID, but throw in a global pandemic, and the game changed exponentially.

When consumers’ usual face-to-face buying habits were stymied due to forced restrictions on their movements and social distancing protocols, Kiwis supercharged their click happy ways.

Chris Beasleigh, Bayleys national director retail sales and leasing, said in response to the rise in online demand in 2020, businesses had to swiftly assess their e-Commerce capability.

“Some struggled because e-Commerce was not yet a truly embedded part of their overall business model, others because their online platform was not robust enough to cope with a dramatic influx of traffic, and many faltered due to stock shortages caused by supply chain disruption.

“Then there were the added logistical challenges of compromised delivery networks, along with confusion and mixed-messaging around what constituted ‘essential items’.”

Omnichannel retailers are continuing to suss out the optimal balance between serving customers physically instore, and digitally, in a post-COVID-19 world.

Some figures

NZ Post’s e-Commerce Spotlight research into how COVID-19 impacted Kiwi online shopping activities, revealed that New Zealanders spent a total of $5.8 billion online in 2020, around $1.2 billion more than in 2019, with 305,000 new online shoppers.

Other takeaways from the NZ Post research include:

• Two million Kiwis shopped online in 2019 – 50 percent of the adult population
• 11 percent of all shopping is now done online
• One-third of online spend is from the Auckland region
• 71 percent of all online spend was with domestic retailers
• The strongest growth occurred in older age groups (over 60), with a 30 percent rise in spend
• Homewares, appliances and electronics grew the fastest in 2020, nearly 60 percent higher than in 2019.
• The “buy now, pay later” trend continues its rise from the last few years, more than doubling its annual online spend in 2020.

A recently-released report by Deloitte for Shopify, says the Canadian-based multinational e-Commerce platform created 13,000 jobs in New Zealand during the pandemic and $3.4 billion in economic activity.

In New Zealand, Shopify said there was a 56 percent increase in new store creation during 2020, with 17,000 New Zealand merchants on its platform by the end of last year.

According to the NZ e-Commerce Association, the number of new online stores in New Zealand has escalated from 446 fresh to the scene in 2015, to 9369 by November 2020.

Across the ditch, Australia Post’s recent e-Commerce Industry Report , said Australians spent AU$50.46 billion online in 2020 – compared to AU$32.1 billion in 2019, with 82 percent of all households (equating to 9 million households) spending online.

Excluding café, restaurant and takeaway food expenditure, online buying accounted for 16.3 percent of all retail spending in 2020 – a figure Australia Post said it did not expect to see until about 2023.

It took Australian consumers a little more than eight months of online shopping in 2020 to eclipse 12 months’ worth in 2019.

Food trolleys

Matthew Grainger, Woolworths New Zealand’s acting general manager format, development and property, said e-Commerce is a fast-growing part of its Countdown supermarket business, and now represents more than 10 percent of total sales.

“Our customers lead busy lives and welcome the convenience of purchasing groceries online.

The growth of “dark stores” – dedicated fulfilment centres where there is no customer-facing service – is a trend being seen globally and being embraced by Countdown.

“Traditionally, all of our orders have been picked from local Countdown supermarkets, but with the growth of the online channel we have recently developed dedicated Countdown e-Stores in Auckland and Wellington, solely for servicing our online home delivery customers,” said Grainger.

“We have also recently upgraded Countdown Moorhouse in Christchurch and added an automated system for picking online orders.

“While these e-Stores play an important role in the larger metropolitan areas, they don't meet all of our customers' shopping missions, so there will always be a need for well-designed supermarkets in convenient locations throughout New Zealand.”

Grainger said Countdown is trialling a range of industry-leading technologies for picking and storing online orders.

“As well as using technology for picking, we are also using new technologies such as e-lockers and automated storage units to make it even more convenient for our customers to pick up their online orders.

The Foodstuffs North Island Limited annual report – reflecting business across its brands including New World, PAK’nSAVE, Gilmours, Four Square and Liquorland in North Island markets – reported huge growth in online activity when the COVID-19 lockdowns came into force.

Its online traffic went from 450,000 visitors across PAK’nSAVE and New World in December 2019, to more than 1.1 million in March 2020, with the PAK’nSAVE click and collect model finding new traction in the market.

Across the Tasman, Woolworths supermarkets are rolling out “Delivery Now”, an app-based option allowing customers in certain locations to have an order of up to 50 hand-picked items delivered within two hours.

There is a flat fee, orders can be tracked in real time on a live map, and third party providers are used to deliver the orders.

Woolworths Australia is also on a fast e-Store trajectory with a recent announcement that it will build its first automated centralised fulfilment centre at a cost of more than AU$100 million Auburn, in Sydney’s western suburbs.

According to data analysis by agency Zenith, one in five Australians who took up online shopping during the pandemic say they will stay with regular digital buying.

A national ZenPoll carried out across the Tasman recently shows that while 29 percent of Australians started doing more online grocery shopping as a result of the pandemic, 21 percent say they will continue to do so even when the crisis is over.

Big box retail

The Warehouse Group annual report 2020 posted a significant rise in online sales across its group stores which comprise The Warehouse, Warehouse Stationery, Noel Leeming, Torpedo7, and its dedicated curated lifestyle e-Commerce marketplace, TheMarket.com.

By the end of financial year 2020 (FY20), online sales for The Warehouse Group had increased by 55.2 percent on the prior year, and represented 11.4 percent of total group retail sales for the year.

Group chair Joan Withers said: “COVID-19 has changed the way people work, engage socially and shop.

In the report, Withers said the performance of TheMarket.com – which was launched late-2019 offering more than two million products across more than 3,500 brands – gives the group confidence in the long-term value of this investment in the digital future.

Warehouse Group chief executive Nick Grayston said in his annual summation, that Click & Collect sales increased by 103.2 percent in FY20 and a survey conducted on shopping habits during the first COVID-19 lockdown found that 48 percent of respondents shopped online with The Warehouse Group for the first time in 2020.

Briscoe Group, which includes Briscoes, Rebel Sport and Living and Giving, reported its half-yearly sales to July 2020, which included the alert level 4 lockdown, were $292.4 million, down just 3.4 percent on the previous year, despite the pandemic disruptor.

Briscoe Group managing director Rod Duke was quoted saying the company’s online platform had become increasingly important, and it expects online sales to comprise around 15 or 16 percent of the groups’ sales as business resumes a more normal path.

He attributed some of the spirited consumer spend to suburban households having more discretionary money to spend given the restrictions on overseas travel.

New Zealand had a voice at the Smart Retail: Powering Nation’s Digital Economy two-day live virtual conference, held earlier this year, with Retail NZ chief executive Greg Harford giving a presentation entitled "Retailing in New Zealand through the lows and highs of COVID-19".

Pre-COVID, roughly half of New Zealand retailers had no online presence, Harford estimated.

Today, he said, that number is down to a quarter and he claimed about 17 percent of retail sales by volume are now done through e-Commerce channels – up on the NZ Post figure of 11 percent.

In dealing with its retail clients throughout the COVID-19 challenges, Beasleigh says Bayleys retail teams are well-equipped to meshing requirements for physical space against the need to have sound omnichannel models.

“There is definitely scope for significant growth in the retail sector, but it will require smart thinking, intelligent planning and an ability to pivot when external market forces change.”

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