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How will the rise in online spending affect your investments?

Date: Sep 05th, 2014

The growth in online shopping has caused some to question how this will affect traditional retail stores, and what this effect will ultimately have on investments. In this article we examine some of the opportunities investors can consider in light of the rising trend of online shopping.

Companies that are able to capture new revenue through online spending will be rewarded

In all sectors internet shopping is rising at a rapid rate. While this rising trend has come from small beginnings, any time there is a disruptive trend, it’s important for investors to be astute and carefully watch those companies that may previously have been regarded as well-established and ‘safe’.

We believe the companies that will be successful will be those who are able to restructure their businesses in response to changing economic and consumer circumstances. This may include transitioning business models to accommodate online shoppers by improving websites, expanding product offerings, and focusing on innovative ways to deliver products from point of purchase to customers.

Consider businesses who sell exclusively online

Other opportunities for investors from online shopping include successful businesses that are exclusively online, such as Amazon and Overstock. In Australia, a similar business includes OzSale which has no traditional store, and whose business model involves selling solely online.

It’s not the end of traditional retail shopping!

While there is certainly a rise in online spending, we don’t believe that this heralds the end of traditional retail shopping. Many retail properties have embarked on redevelopment plans to transform centres into entertainment destinations and there has been an expansion of highly regarded global brands entering the Australian retail market.

Japanese retailer UNIQLO, Swedish retailing giant H&M and Spanish trend setter Zara have all set up shop in Australia. Many of these retailers have been motivated to open in Australia after seeing strong Australian buyer interest in their online sites. As such, the growing trend of online shopping has actually revealed to many global retailers that Australia is a bit of an untapped ‘Treasure Island’!

AMP Capital Shopping Centres Managing Director Bryan Hynes has said the quality of the international retailers coming to retail centres such as Macquarie Centre, New South Wales’ largest retail centre, only confirms the strength of redevelopment moves. This will transform the centres’ retail offering and customer experience.

For investors in listed and direct property the expansion of highly regarded brands seeking to do more retail business in Australia could support leasing activity, and as a result underpin the yield offered by these assets as landlords drive income growth by undertaking opportunities or expansion, refurbishment and development.


About the Author 

Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital is responsible for AMP Capital's diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.


Important note: While every care has been taken in the preparation of this information, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) makes no representation or warranty as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This information has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. Certain information in this website has been obtained from sources that we consider to be reliable and is based on present circumstances, market conditions and beliefs. We have not independently verified this information and cannot assure you that it is accurate or complete.

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