Daily deal sites take on retailers

Published on Wed, 27/04/2011, 02:53:29

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By Aimee Chanthadavong

Despite continuous reports of flat overall retail spending, sales for group buying and daily deal websites are booming, growing by 280 per cent this financial year, according to IBISWorld.

According to IBISWorld, the online group buying and daily discount sector has grown to be worth $377 million in 2010-11. Sites such as Cudo, Spreets, Ozsale, Catch of the Day and Stardeals accounts for 1.8 per cent of Australia’s online retail spend of $21.3 billion.
 
Speaking to Retailbiz, IBISWorld senior analyst Ed Butler said the reason for this growth is because consumers are now willing to wait for cheaper products and are looking for more savvy ways to grab a bargain.

“It does create a threat for long-term viability for brick and mortar retailer but during the GFC some retailers turned to heavy discounting to maintain their turnover and so since then we got comfortable with discounts. This is something that will be enhanced by this [daily discount] trend,” he said.

While sales for brick and mortar retailers expected to grow by just 2.3 per cent in 2010-11, IBISWorld predicts the segment will double its revenue by 2015-16, exceeding $650 million and accounting for 2.1 per cent of online retail spend.

“I think in Australia these sites are more of a symptom than a cause. America has a much stronger coupon or voucher market and its seen more as a cause. Its coming through Australian consumers because they are just much more bargain hungry and this is a much viable way to branch into the retail market,” Butler said.

The most popular products and services within the online discount sector are travel and accommodation making up 29.3 per cent of daily deals followed closely by retail goods at 29.2 per cent.

IBISWorld said that new entrants to the discount market will focus on niche market such as fitness, restaurants and leisure, while others will try to take on Catch of the Day and new player Harvey Norman Big Buys in the clearance goods market.
 


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