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Department stores' bricks and clicks beat online-only retailers

Department stores are back. They may have lost some of the early battles against online retailers, but new data suggests they may be winning the war.

Credit card transaction data from the Commonwealth Bank has shown that stores such as David Jones and Myer, which combined have been trading for almost 300 years, are growing faster online than their web-only competitors.

Consumer group Choice says local retailers have overplayed the threat from international competitors, and underestimated the satisfaction consumers get from going in-store.

Bricks-and-mortar stores now control just over 50 per cent of total online spending on Commonwealth Bank credit cards, and their growth is continuing to outpace pure-play operators, CBA analyst Andrew McLennan said.

''While the rate of change may be impacted by the recent deterioration in the Australian dollar, there is little doubt that [traditional] retailers have regained their online mojo as consumers return to the domestic brands,'' he said.

The Commonwealth Bank, Australia's biggest credit card provider, examined all its card transactions in the past year and found that online sales at so-called omni-channel retailers rose 22 per cent.


This compared with sales growth at ''pure-play'', or solely online, retailers of just 13 per cent.

The data follows NAB's retail sales survey released in September which showed that bricks-and-mortar shops were successfully evolving to ''bricks-and-clicks'' operators, after companies including David Jones, Myer and Harvey Norman poured millions of dollars into omnichannel strategies.

Mr McLennan attributed the strength of traditional retailers which have ventured online to an improvement in their breadth of product, categories and standards of execution.

''It is hard to separate the impact of the weaker Australian dollar, but it looks like omnichannel retailers will continue to regain share previously lost to internationals and the more nimble pure-play online retailers,'' he said. ''Gone are the days when domestic traditional retailers sat on the sidelines complaining.''

Mr McLennan said he expected the traditional department store chains to aggressively take even more market share in future, but the longer-term outlook was unclear as it depended on the strategies of online-only competitors such as Amazon.com.

A spokeswoman for David Jones said the department store had transformed into an omnichannel retailer and that customer response to the change had been ''incredibly positive''.

''In 2014 we experienced incremental sales growth from all of our sales channels including online, click-and-collect and in-store,'' she said. ''Our customers have embraced our omnichannel offering and the convenience of being able to shop with us when they want through a variety of channels.

''Whilst it is still early days, we expect to generate approximately $200 million of sales via our online channels within the next four years. Our recent sales performance is consistent with the CommSec report findings.''

Choice spokesman Tom Godfrey said the report reflected consumer preferences.

''Being able to blend the convenience of online with the satisfaction derived from going in-store is clearly something consumers have been demanding for some time,'' Mr Godfrey said.

''The data will come as welcome news for bricks-and-mortar retailers who have been playing catch-up to the big international online retailers such as ASOS and Amazon. It also highlights how local retailers have overplayed the threat from international competitors when it comes to their calls for the lowering of the GST low-value threshold.''