Online sales to accelerate

That’s the view of UK retailer John Lewis, which has just passed £1 billion ($1.7 billion) in online sales.

Simon Russell, director of retail operations development, says Australian internet retailing will accelerate rapidly. Mr Russell says the success of John Lewis comes from bringing together online, mobile and in-store retail channels – something Australian retailers have yet to fully exploit. Australian department store retailers David Jones Limited (ASX:DJS) and Myer Holdings (ASX:MYR) currently generate less than 1% of their sales online, compared to around 25% for John Lewis.

JB Hi-Fi Limited (ASX:JBH) is only slightly ahead of DJs and Myer, with just 1.6% of sales coming from its online store.

Mr Russell says they have free wi-fi in all John Lewis stores, and embrace shoppers using mobile phones to check prices and get further information. He has backed the Australian department stores to get online sales into the teens before too long, adding that online stores should be viewed as a component of the stores’ whole offering rather than an alternative.

In a new report, professional services company Deloitte estimates that Australia’s internet economy will grow at twice the rate of the economy, from $50 billion now to $70 billion in 2016. National Australia Bank (ASX:NAB) estimates that Australian online retail spending totalled around $13.9 billion, or 6.2% of total in-store spending, in the year to June 2013. But as more and more Australians become internet savvy, many are likely to increase their online shopping spend, helped along by retailers fine tuning their online offerings.

Foolish takeaway

Aussie retailers will be trying to capture some of the estimated $6 billion that Australian consumers spend on overseas online sites. The falling Aussie dollar should help as well, but retailers will be hoping that the government also lowers the $1,000 GST free threshold, so they can compete on the same level as offshore stores.

Interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading

Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.