NZ Post says retailers are going to have to think of new and innovative ways to tempt shoppers in-store and online as consumers become pickier about what they buy in a cost-of-living crisis.
This year’s e-commerce market sentiments report out of NZ Post put a spotlight on what online retailers and shoppers experienced in 2022 and what retailers are prioritising in the year ahead.
“On paper 2022 was always going to be a less spectacular year for online retailers than the previous two, given the physical stores were open for most of the year,” the report said.
“What wasn’t foreseen though was the impact that the post-lockdown economic environment would have on retail, across all channels.”
The postal service firm’s report was based on surveys with 200 online retailers and nearly 600 online shoppers conducted in February this year.
NZ Post said retailers experienced a boom in online sales during 2020 and 2021, thanks to lockdowns turning people to online shopping. Online shopping continued to be popular even after physical stores reopened.
But that’s not to say it’s been all rosy on the online retail side since then. Retailers have struggled to keep up with significant volume growth, paired with global supply challenges and delivery disruptions.
NZ Post found a total of $6.07 billion was spent online in 2022 – up just 4% on 2021 but up 62% on pre-pandemic 2019.
Last year also saw 3.9 million online transactions, which was a 5% increase on 2021 but a 45% increase on 2019.
Over 70% of the $6b spent last year was on NZ-based online businesses.
The average shopper made 27 transactions during 2022 and had an average annual online spend of $3,083.
NZ Post said over a third of the shoppers it spoke to felt that their overall retail spending reduced in the past year, with rising living costs and mortgage payments squeezing their ability to buy.
Nearly a quarter of the surveyed thought they’d actually spent more in 2022 than in 2021.
But both groups saw a bigger spend on retail online, regardless of whether they were tightening their purse strings or not, with 39% of respondents shopping more online in 2022 than in 2021.
Like last year, the economic environment would “once again” be a key driver in consumer spending patterns in 2023.
Convenience was the main reason for 71% of shoppers when questioned why they chose online shopping over in-person shopping, but price comparison wasn’t far behind at 54%.
NZ Post’s general manager of business marketing, Chris Wong, said now more than ever, shoppers love a bargain.
“So, it’s not surprising in the tough current conditions discounts and special offers are what Kiwi shoppers value most,” he said.
Omnichannel growth set to soar
The omnichannel shopper is also becoming more popular, with two-thirds of shoppers looking online before going to a store to purchase a product. A third of shoppers were found to buy online and then go to a store to collect.
Wong said having both an online and physical presence was quickly becoming a competitive advantage for retailers in a challenging economic climate.
“We are already seeing many physical retailers embracing a multichannel approach to sales, focusing on providing seamless customer experiences – whether the customer is shopping online from a mobile device or physically in-store.”
The majority of retailers also appeared to be “optimistic” about the rest of 2023 – but NZ Post said a watchful eye would be kept on the supply chain and stock fulfilment issues that have been hitting retailers hard.
