The growth of online shopping has been one of the biggest stories in retail for a number of years now, with major implications for how retailers reach their customers and plan everything from promotions to bricks-and-mortar presence and warehousing.
Here we look at five recent trends to keep in mind when planning your 2025 online and phygital strategies to help you tailor your offering and engage with customers in ways that best meet their evolving habits.
1. Online is here to stay
The past five years have delivered plenty of turbulence in retail, but a clear trend has emerged: online shopping is now part of most people’s regular shopping experience and is here to stay.
While inflation and slowing economic growth forecasts have dented consumer confidence, the portion of total spend going to online has either held firm or increased. In New Zealand, Q4 of last year saw total retail spend increase by only 1%, but online spending went up by 9% to $1.73 billion. Around 40% of all Kiwis aged 15 and over shopped online between October and December, an increase of 4.6% from the same time in 2023.
Meanwhile in Australia, at least eight out of every ten households shopped online during 2023, up 1.4% from the previous year, with at least one in seven making weekly online purchases.
When it comes to deciding how to shop, consumers are choosing the convenience of ecommerce and are building online purchasing into their everyday lives.
2. The generations shop differently
The shift to online, though, isn’t spread evenly across all generations, with young people being the most enthusiastic online shoppers. According to Australia Post, 21% of purchases made by 18-26-year-olds happen online, while for 27-43-year-olds the number is even higher at 23%. Gen Xers buy online 19% of the time, and baby boomers rate lowest at 14%, although the total spend among this last group continues to grow as they warm to ecommerce.
For many young shoppers, buying online has become a weekly habit. A study of shopping trends for 2025 found that 51% of Gen Z customers and 41% of Millennials shop online multiple times a week, often responding to customer reviews. Boomers are more deliberate, less frequent shoppers and are more likely to be influenced by perceived value through promotions and discounts.
3. Smaller purchases, more often
Age also plays a role in how shoppers have responded to tougher economic conditions. While young consumers have cut back in response to cost-of-living challenges, older buyers with higher disposable incomes are more willing to spend on items they need or want.
Overall, though, there has been a trend towards shoppers choosing to make smaller purchases more often, resulting in smaller basket sizes. In New Zealand, consumers are buying online more often but are spending less when they do so. They are using online stores as a way of comparing prices and searching for the best deals, and they are willing to swap to a cheaper alternative if it means getting a bargain.
A similar pattern has emerged in Australia, where in 2023 consumers made smaller purchases more often, with the average basket size down 4.6% from the previous year.
Cost-conscious shoppers are also looking overseas to find the best deals. In Q3 2024, New Zealanders’ online transactions with local retailers fell to 68% from 70% the previous year, as offshore transactions grew. And a 2024 survey of Aussie shoppers found that 11% of their online spend is done with overseas-based retailers like Shein and Temu. As economist Chris Richardson of Rich Insight said at the recent Australian Retail Association Leaders Forum 25 in Sydney, competition in this space is fierce and getting fiercer.
4. Big sales events dominate
The hunt for a bargain has seen high-profile events such as Black Friday, Cyber Monday and Boxing Day continue to dominate online sales numbers. Australia Post found that Australian retailers enjoyed a 7.8% year-on-year increase in online purchases during 2024’s cyber weekend, with 7.6 million households taking part, while spending over the same weekend in New Zealand was 7% higher than the previous year as instore spending held firm. Boxing Day, meanwhile, saw a whopping 30% increase in online transactions from 2023.
5. Instore keeps its top spot
Despite these impressive gains for online retail, instore shopping remains the single biggest sales channel. In New Zealand, for example, while online spending amounted to $1.73 billion in Q4 of 2024, instore spending came in at $14.4 billion.
What’s more, in Australia 38% of shoppers still prefer visiting a physical store to shopping online.
The split between online and instore, however, is not a hard and fast one. As Scott Fyfe, CEO of David Jones, recently noted, 70% of his customers start their digital journey online before coming into store. Even if a sale ends up being completed instore, it’s clear that shoppers use online to check prices and availability, making the web store a vital part of the overall journey.
Meeting the moment
Online shopping is and will continue to be an essential and expanding part of the retail landscape. So how do you incorporate these trends into your strategic planning?
For a start, pay close attention to customers’ price sensitivities and spending habits so you can price goods effectively by demographic. Mature customers may be willing to pay more than young shoppers, so look at who you are enticing and targeting with promotions, and price accordingly.
Use data analytics and demand forecasting to identify the best times to run promotions, including but not limited to the major annual sales events, and then tailor deals by market segment.
Perhaps most importantly, rather than seeing online and instore as separate channels, take a phygital approach that recognises the way customers use your online store both as a place to buy and as a place to browse for instore shopping. Fully integrating these channels means establishing a single source of truth, so that both you and your customers have a reliable, real-time view of stock and price.
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