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News release


The Australian retail market is converging as the growth of ecommerce slows​​

Online retailers are putting products in bricks and mortar stores, physical retailers are selling online, brands are partnering to sell products and are expanding their offerings – leaving much for the Industrial property sector to consider

​AUSTRALIA, 11 April 2014 – The Australian retail market is converging as ecommerce spending growth slows, hitting a hurdle with gaining further market share. 

At JLL’s annual major national Industrial event in Sydney yesterday, the Executive Chairman of the National Online Retailers Association (NORA) Paul Greenberg discussed ways retailers are adapting to respond to this growth hurdle and gain more customers. These include both on and offline retailers having both a physical presence in-store and with online sales; creating specialised showrooms or pop-up stores to draw crowds with unique experiences; partnering with other brands to sell products; and expanding their product offerings. This is creating changes for the Industrial property sector, according to JLL.

JLL’s NSW Managing Director and National Head of Industrial Michael Fenton said new trends in retail could see more businesses moving to purpose-built Industrial facilities and away from the one-size-fits-all warehouse model.

“Businesses have more to consider now when it comes to their Industrial properties. Many retailers are expanding their product offerings to attract new customers, which is impacting on the types of warehouse facilities they need – down to the types of vehicles and trucks which can access the facility, and how far it is efficient for them to travel. The implications for faster, cost-efficient parcel delivery services means that in some instances, having a greater amount of smaller facilities closer to delivery destinations may be more effective than having one larger, central warehouse function.

“Australia Post has responded to increased demand for parcel deliveries in Australia. Third-party logistics providers see an opportunity to push further into that market. Obviously Australia Post has an advantage through the location of their existing branch network, which would be difficult to replicate,” said Mr Fenton.

According to Mr Fenton, online retail operators generally have preferred locations close to Australia Post parcel hubs, with good access to public transport to attract staff. “For younger tech savvy talent, like developers, locating close to the city may be preferable - some will not commute to industrial hubs.  This is likely to see offices and distribution centres separate. Purpose-built facilities are only just starting to become a reality. As the industry matures and automation increases, ‘specialised’ or purpose-built real estate will become more desirable.”

Speaking at JLL’s Industrial event today in relation to the retail sector’s adaptation to today’s market, Mr Greenberg said the honeymoon of pure-play online retail is over. “The retail sector is consolidating resources to more efficiently attract new customers and remain relevant to existing buyers. Instead of just selling online, we are seeing brands increasingly partner with others to achieve footfall and expand their presence. 

“We are also finding that Australian wholesalers are increasingly going directly to the customer – in some instances cutting out the middleman retailer by approaching the public directly, either through online sales via their own and other aggregator sites, or through physical stores. Many businesses are doing a combination of everything to expand their market share and appeal to new customers.

“Businesses like Nespresso, Apple, Samsung, Swarovski, and Croc are all brand owners who both retail and wholesale in Australia. They have elegant stores and direct relationships with customers, and can also be bought in other larger retail outlets and online. This partnering and expanding is a fast-accelerating trend in Australia,” said Mr Greenberg.

According to Mr Greenberg, “The pace of change is amazing – customers are increasingly in control, but it’s a win-win situation. The changes are positive for both retailers and customers in Australia, as there are diverse opportunities to sell products; people are first and foremost buying from Australian retail sites ; and customers will have more products to choose from. Retail thrives in a diverse environment.

“Australia is upbeat about our retail future in comparison with 12-18 months ago – there is a better sentiment in the market and an increasing trend towards Australian retailers. A lot of our brands have gravitas overseas also – particularly in Asia, Australian brands like RM Williams and Country Road do really well. We are welcoming international brands into this market, which is having a positive impact on Australia’s retail economy.

“The impact of brands diversifying their range of products on sale, such as fashion retailers selling homewares, will have an impact on how and where these brands manufacture and store goods – with direct considerations for the location of their Industrial properties and also on how they arrange for goods to be delivered,” concluded Mr Greenberg.