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Retailers explore permanent online shift

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
30 April 2020 2 minute readShare
online retail

While the coronavirus crisis had unapologetically forced many retailers to rethink their sales strategies and shift their focus online, a month later it seems many may permanently abandon brick-and-mortar stores in favour of online trading.

Australia could be approaching a mass retail exodus as a host of its largest retail chains explore the possibility of moving store networks online.

While only a month ago, retailers struggled with the forced closure of stores, most are now experiencing unprecedented boosts in their online sales, ushering them to explore the closure of their physical locations permanently.

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In a statement to the ASX, Accent Group — the owner of Sketchers, Platypus, Hype DC and the Athlete’s Foot — said that after initially shutting down its stores for a period of four weeks, it is now re-evaluating the location, size and format of its store network on the back of a significant acceleration in digital sales.  

Accent Group confirmed that digital sales have grown from an average of approximately $250,000 per day prior to store closures in March to between $800,000 and $1.1 million per day for the last two weeks of April.

 

Acknowledging the shift brought on by the coronavirus crisis, the CEO said he expects online sales to continue to make up a larger share of total sales in the future.  

“It is clear that there has been a seismic and most likely enduring shift in consumer behaviour away from traditional shopping centres to shopping online,” Daniel Agostinelli said.

As such, Mr Agostinelli confirmed that while Accent will progressively re-open all group stores by 11 May, it will, in the coming month, re-evaluate its physical locations to ensure the “appropriate” balance between digital and store sales.

Speaking to The Sydney Morning Herald, Mr Agostinelli confirmed that this could see it close anywhere between 50 and 100 of its 522 stores. However, if negotiations with landlords don’t go as planned, this number could increase.

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Mr Agostinelli said: “The mix of Accent’s superior digital capability and the magic of our stores gives us a key competitive advantage, but it is important that we reach agreement with our landlords for sustainable and fair rental deals. With landlords where this cannot be achieved, we will close stores.

“Unfortunately, that has already occurred with one of our major landlords and we have given notice to exit 28 store leases at expiry over the next six months. We may also be forced to take similar action for more stores in the future.”

Similarly, fashion retailer Pas Group has informed its investors it has appointed advisers to pursue a restructure of the business.

Pas Group confirmed that this will likely lead to a reduction in the number of its retail stores in an effort to significantly cut costs.  

Supporting local retailers

In a further effort to help local retailers keep their doors open, Mirvac Retail Centres have launched an innovative online marketplace and contactless drive-thru, pick-up service dubbed “Essentials Express”.

The Essentials Express has started operating at Moonee Ponds Central (MPC) in Melbourne where shoppers can order from a range of local retailers, offering dozens of fresh food items and curated packages of products.

Kelly Miller, general manager of retail at Mirvac, said: “Key to this has been a willingness of our retail partners involved to be agile and rapid in the rollout of the Essentials Express. Our retailers have been very enthusiastic, and we are thrilled to deliver a curated and collaborative online solution so they can to continue to serve their customers.

“Importantly for Mirvac Retail, it is our opportunity to support smaller and locally loved retailers who may not have the scale and resources traditionally to adapt their operating models and implement these type of technology solutions.”

The online marketplace will activate within the next fortnight across centres in New South Wales (Rhodes Waterside and East Village) and within the month in Brisbane (Toombul and Orion Springfield Central).

Retailers explore permanent online shift
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Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

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