Major US department store JCPenney has opened an online retail outlet in Australia, allowing Australians to view and buy its core products (apparel, shoes, soft furnishings and homewares) direct from the US, with prices shown in Australian dollars.

According to IBISWorld, this should act as a wake up call for the Australian retail market, since our department stores already trail their US counterparts when it comes to e-commerce capabilities.

With our largest department stores, including Myer, Big W and David Jones mostly offering store, product and promotional information via their websites, with limited transaction facilities, more and more Australians are buying overseas goods online, a trend IBISWorld general manager (Australia), Robert Bryant, expects to continue.
“With broadband internet penetration expanding rapidly, Australian department stores are passing up a valuable opportunity if they don’t act soon to ramp up their online presence.”

JCPenney said its strategy in Australia was to offer “high-quality and brand-name merchandise at prices that compare more favourably than those locally”.

But with their goods taking 12 to 14 working days to arrive, Bryant said local retailers have a competitive advantage when it comes to the ability to deliver goods quickly, and yet they’re currently in danger of being swamped by overseas retailers with more effective and aggressive online strategies.

Australians are the third biggest online consumers in the world (based on pro-rata population), and yet our online retail transaction facilities are generally poor. IBISWorld believes every item purchased from an online retailer aboard is a lost opportunity for an Australian competitor.

Bryant warned that with internet penetration increasing, so will the size of this lost opportunity.

“We expect broadband subscribers to reach 9.6 million by 2012, up from 7.1 million this financial year. Given this growth, the potential for trading in the online space will continue to grow, and Australian retailers can no longer ignore the benefits of offering transaction facilities for their products, particularly clothing. Generation Y are major consumers, and they’re extremely accepting of purchasing online.

“Australian retailers need to use the internet to do much more than just present a snapshot of their product, brand and store information, they need to use the e-commerce space as an important channel to not just boost market presence and penetration, but to clear stock and incrementally add to sales volumes,” said Bryant.