New Zealanders buying less from physical stores

university-of-canterbury

Sun Jun 23 2013 12:00:00 GMT+1200 (New Zealand Standard Time)

New Zealanders buying less from physical stores

Sunday, 23 June 2013, 1:23 pm
Press Release: University of Canterbury

New Zealanders buying less from physical stores as online retailing continues to rise

June 23, 2013

New Zealanders are buying less from physical stores as online retailing continues to rise, a University of Canterbury expert says.

More New Zealanders are shopping online than ever before, with $3.7 billion of internet sales in the last year.

UC’s Head of Marketing, Associate Professor Paul Ballantine, says the traditional staples of online retailing largely include DVDs, books, electronics, and fashion. Travel and food and beverages are becoming increasingly popular as well.

``The immediate effect of the increased growth in online retailing is that people are purchasing from physical stores less. In addition to this, while many consumers still choose to visit traditional retail stores, this is often for ideas shopping. They are working out what they would like to buy, but with the intention of purchasing goods from an online channel, whether it be in New Zealand or overseas.

``Many retailers who were initially ambivalent about being online have made the decision to invest more in their online presence. This has allowed them to provide a multi-channel offering and it provides consumers with an opportunity to go in-store or shop online at a time and place that is more convenient for them.’’

Nielsen's recent online retail report shows 1.78 million New Zealanders spent up large online in 2012 The figures are expected to rise to two million Kiwis spending $4 billion by the end of this year. Figures also showed consumers were buying more often: a quarter made 11 or more online transactions.

Professor Ballantine says the fact that more New Zealanders are buying online is no surprise. During the early stages of online retailing, there were many concerns around issues such as credit card security.

``However, as more and more people have had successful experiences with buying online, any issues about perceived risk have lessened. This has led consumers to buy more online, in addition to them starting to buy a wider range of goods online as well.

``It does mean a number of New Zealand stores are missing out as people buy online from overseas sites. If identical goods can be bought elsewhere for cheaper, it’s no surprise that more and more people are choosing to purchase goods from international online retailers.

``This is especially true if consumers view any potential risks as being minimal. Of course, if consumers continue to have only positive experiences when purchasing internationally, any perceived risk will just continue to lessen with each successful transaction.

``Services like YouShop (provided by New Zealand Post) have made it even easier for New Zealanders to purchase goods which they may have not previously been able to do so.’’

Given the current value of the New Zealand dollar, it’s clearly never been a better time to purchase goods from overseas. The relative cost advantages provided by international online based retailers will fluctuate along with any exchange rate changes.

``With New Zealand based retailers serving quite a small market, the advantages about having more product choice online are another reality and it is very difficult to emulate the abundance of choice that is available online in a physical store.

``Whether it be a New Zealand based or international online retailer, the inescapable fact is that online shopping is often more convenient. This, combined with the relative cost savings of buying overseas due to the high value of the New Zealand dollar, means that many retailers face a hugely challenging environment,’’ Professor Ballantine says.

ENDS

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