Publication:

Changing Tides: BDO Retail Market Update

30 March 2015

John Bresolin |

Are e-commerce operators still enjoying phenomenal growth, whilst their bricks and mortar counterparts struggle to cling onto consumers' spend? Or will the online bubble burst?

BDO has conducted a study* of the retail industry to identify which sub-sectors have shown the largest percentage (%) change in growth margins, over the past three fiscal years.

In exploring the online/offline split, we have analysed and identified the 20 highest, two low-growth (but stable), and the 10 poorest performing retail sub-sectors. Not surprisingly, online sales channels represent 19 of the top 20, with fast fashion the only bricks and mortar inclusion.

Despite the rise of Omni-channel retail, e-commerce revenue is still growing at higher rates than bricks and mortar.

Key findings include:

Online retailers of household and family products are set to be the emerging sector leaders as Australians shift their shopping priorities

  • Online household furniture emerges as the top sub-sector overall, with the highest rates of forecasted revenue growth in both FY15 (20.1%) and FY16 (16.2%)
  • Online baby products, online sporting apparel, online grocery and online books are set to round out the top five in FY15.

Online growth drops off

  • Five of the top 10 performers in FY15 are forecasted to experience substantial drops in growth in FY16
  • Sector growth figures of 20-30% experienced over the last few years are predicted to decrease to a more conservative and perhaps sustainable rate from FY15 and FY16 onwards.

Bricks and Mortar adapts and stabilises

  • Bricks and mortar operators that have previously struggled are starting to successfully reduce, and in some cases reverse, sales decline
  • In particular, toys and convenience stores are forecasted to continue their steady recovery and record solid positive growth in FY16, 2.3% and 1.1% respectively.

*Underlying data was sourced from IBISWorld, including revenue growth figures from a total 85 retail sectors for FY13 and FY14, and forecasts for FY15.

Changing Tides Infographic