The $7.3 billion opportunity for Australian retailers

New data released today by Adyen underscores the importance of unified commerce retail in mitigating sector and wider economic turbulence caused by the coronavirus pandemic.

Anonymised transaction data across Adyen’s global payments platform found that around half of retailers adopting a unified commerce or omnichannel approach saw their total number of transactions remain consistent during the pandemic, meaning that the reduction in sales volumes from stores was offset by online channels.

“COVID-19 has shaken Australia’s retail sector to its core, with consumers prioritising shopping closer to home, with those who provide a better experience, or that can be trusted to stock certain goods,” Michel van Aalten, country manager Australia and New Zealand at Adyen says.

“Many retailers have impressed Aussies by adapting their operations and offering shoppers more flexibility across this period. Consumers want to see this agility continue and are looking for seamlessness between online and offline stores. Unified commerce will help retailers navigate this changing environment and excel in this next normal.”

Adyen’s data also found that shoppers who only ever purchased from a retailer in-store prior to Covid-19 spent, on average, 40 per cent more when they shifted online to make purchases during the pandemic.

The importance of unified commerce to Australia and the global retail sector’s performance is further demonstrated in independent economic analysis commissioned by Adyen and conducted by the Centre for Economic and Business Research (Cebr).

Cebr’s research found that the proportion of Australian retail spending stemming from online channels stood at 9.7 per cent in July, whereas it averaged just 6.6 per cent in the six months prior to the pandemic. If this proportion was increased even slightly, there could have been a significant positive economic impact. 

Cebr used the United Nations’ UNCTAD index to assess countries’ unified commerce readiness. Australia was placed as the 10th most suited economy for unified commerce readiness, ahead of the US and Hong Kong, but trailing Singapore, the UK, Germany and many of the Nordics.

Accounting for the stringency of country lockdowns, Cebr found that a five-point increase on the UNCTAD index was associated with 2.6 per cent better retail sector performance during the pandemic. Across a subset of 14 countries, this equates to a more than $515.2 billion improvement in turnover that could have been created, with $7.3 billion alone coming from Australia.

However, while online channels were a lifeline to retailers during the pandemic, physical stores are far from dead. Consumer research conducted by Opinium as part of Adyen’s study shows that post-pandemic, nearly three quarters of Australians still prefer to shop in store (72 per cent), compared to their global counterparts (58 per cent). Two thirds (63 per cent) are looking forward to shopping in stores for pleasure following the pandemic, while 78 per cent will continue to shop with retailers they relied on during the pandemic.

“Consumers don’t want to be boxed in, they want to shop in a way that works for them and this might change depending on where they are, how they feel or many other factors,” Roelant Prins, chief commercial officer at Adyen says.

“The retailers prepared to cater to today’s consumers were the ones that won out through the first wave of the pandemic. They were the ones agile enough to cope with the constantly changing environment and had the infrastructure in place to continue meeting consumer demands throughout this period. 

“While something as seismic as the coronavirus pandemic may only occur once in a lifetime, the retail sector has been consistently shaken by digitalisation and changing consumer habits. If it’s to survive further shifts, which will inevitably come, retailers need to make sure they’re ready and adopting a holistic approach to unified commerce will be key to this,” he adds.