E-Commerce Summit: Digital first, but stores still have a role, say retailers

Major retailers say that physical stores remain important, despite the fundamental shift to e-commerce accelerated by COVID.

The Australian's Eli Greenblat conducts a panel session at the 2020 e-commerce forum with Paul Greenberg, Jack Gance and Richard Murray.

JB Hi-Fi chief executive Richard Murray has underscored the importance of e-commerce to retailers saying that 80 per cent of the customer traffic to his stores begin online, but has warned the lockdowns in Victoria have forced shoppers to go online that could be falsely inflating the popularity of shopping digitally.

Speaking on The Australian E-Commerce Summit panel alongside Chemist Warehouse founder Jack Gance and National Online Retail Association founder Paul Greenberg, Mr Murray added that there were always pressures on retailers to spend up on e-commerce tools.

But much like marketing budgets “you wish you knew which 50 per cent was the right 50 per cent”.

The retail CEO, who oversees consumer electronics major JB Hi-Fi and its whitegoods chain The Good Guys, said online remained a crucial pathway for shoppers to get to his stores.

“The reality for a bricks and mortar retailer is 80 per cent of your traffic is starting online.

“I think for people like Jack (Gance) and I, we are sitting there saying we want to delight customers however they shop with us and sometimes they have a low involvement purchase and that may well be online and other times they have a high involvement purchase that needs service and experience and that’s more likely to be in store.’’

The australian e-commerce summit logo

But Mr Murray was quick to counter that popularity of online with the realities of the COVID-19 pandemic which he said could be inflating the natural level of online shopping, especially in Victoria which has been struggling under curfews, the forced closure of non-essential retailers and highly restrictive limits on social mobility.

To be blunt, shoppers didn’t have an alternative.

“I’m 100 per cent online in Victoria because I don’t have a choice.”

“Now in Victoria at the moment, or in Melbourne, customers don’t have a lot of choice, they can’t shop in-store and so when I hear people saying ‘wow my online sales have gone through the roof!’, …. Well I’d love to see what everyone’s online sales are this time next year.

“What we have seen is forced outcomes …. but where does the water settle at, passed some unique periods with COVID where we have had Victorian retail shut, will be really interesting.”

Mr Gance told the E-commerce Summit when the COVID-19 emerged in March and April it was like “Christmas every day” in his stores, as his pharmacy group sprinted to keep the shelves stocked.

He said initially sales fell in-store but was made up partly by online sales, with some months online up by more than 150 per cent, but he believes once COVID-19 fades the enthusiasm for shopping online could remain. He said bolstering online was a new cohort of older shoppers who had pivoted to online for the first time, and enjoyed the experience.

“Is it going to go back … after the restrictions are lifted? I don’t think so. I think more will tend to want to stick with online if they enjoyed the experience, we are finding that the customers that are buying online today, the new ones, are not the Millennials that would previously (shop), the buying patterns. We are finding they are the normal housewives and husbands not the Millennials.”

A long-time observer of online retail, Mr Greenberg said what we were witnessing was a reinforcement of behaviour and a permanent shift to a ‘digital first’ environment, but that physical stores still had a role to play.

“I think Jack (Gance) nails it there, and what we are seeing is a reinforcement of behaviour, and I wear consumer psychologist hat as well, and generally consumers take 66 days to change habit, to change patterns, now we have obviously been in lockdown close to a calendar year, and I think we are seeing a permanent shift to the digital first environment.

“Now that’s not to say that the stores won’t play a critical part, of course they will they are still a significant dominant part of the retail pie, but I think Jack (Gance) is right, we have seen an shift, an intergenerational shift, across all generations to the convenience to the safety of home delivery of online shopping. And I guess that will in some ways change the store experience as well, which I think will be fascinating, I think it will be a richer in-store experience and will require investment by the larger retailers.”

Mr Murray said he wouldn’t be making any large difference in his e-commerce investments and budgets primarily because of COVID19, but rather maintaining his focus on both the in-store experience and his digital platforms.

But he added he was concerned when we got back to “normal” activity in Australia as COVID-19 lessens or fades away and the roads networks, supply chains and other infrastructure has to deal with normal traffic which could constrain delivery times.