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Formulating the Footprint

Martin Shaw, head of research for RetailX, introduces the RetailX Australia Top250, our new list of the leading retailers in Australia, which will ultimately measure both size and performance across different retail disciplines

In compiling the RetailX Australia (AU250) top retailers, we have set out to create a definitive list of the most significant ecommerce and multichannel retailers operating in the continent. In doing this, we’ve taken an algorithmic approach to blending and ranking the four components of a retailer’s Footprint: its amount of web traffic, retail revenue, ecommerce revenue, and the company’s total number of physical locations. Over the coming months, the Index will develop beyond this initial Footprint to include six Performance Dimensions.

Market complexity

Millions of Australian consumers buy from thousands of companies that range from niche and locality retailers to giants of global ecommerce. Despite the lack of tariffs and legal barriers to trade, companies operating in this market face the challenge of distance and fulfilment with low population density. A retailer operating in Australia covers a territory larger than the EU but with a fraction of the number of people. That’s why this Performance Index, which identifies and compares how the continent’s largest retailers respond to the same difficulties and opportunities, is so relevant. We started by identifying the biggest, most significant retailers. But we also asked ourselves two more questions: how can we measure Footprint in the most meaningful way? Plus which metrics are most effective in measuring the achievements of thousands of candidate companies? It’s an approach we have taken in analysing the UK and the European Single Market and all metrics we measure here in Australia will be directly comparable to overseas markets.

“We have set out to create a definitive list of Australia’s most significant ecommerce and multichannel retailers”

What is ‘big’?

The AU250 Footprint Index measures ‘size’ across online and offline channels, as well as taking into account turnover from retail sales. Not every company that sells online is a retailer and we focused on those companies that meet our definition of a retailer. First, with the assistance of Knowledge Partners Hitwise and SimilarWeb, we tracked ecommerce web traffic from Australia, recording destination and interaction over a one-year period. Second, we counted the number of stores retailers operate within the six states and two territories of our study. Third, we ranked retailers according to revenue, sourcing figures from corporate websites, media information and published results. Finally, we designed an algorithm to weight and summarise the results.

Our approach is not to assume that ‘big is best’. Nevertheless, size remains significant. In later reports, we’ll answer the question of which retailers are best, but for now we’re identifying which companies are Australia’s biggest players.

Our findings to date

In establishing the RXAU Footprint we have considered web traffic (the share of activity online), company revenues, the level of search traffic (a function of front-of-mind awareness for customers and of potential demand), the ecommerce proportion of sales (indicating the ability to serve a customer across all channels) and the store estate (combining close-to-customer service capabilities and local brand fascia).

Taken together these ‘ingredients’ combine to give a view of ‘heft’, of overall presence in customers’ lives – in their physical experience, their intent and service contact points.

There are a few retailers that have high rankings in all of these Dimensions, but most have strengths in some areas and room for growth in others. However, it is the range of results within these measurement areas that gives an indication of the variety and extent of the Australian multichannel landscape.

Over all of our research in different territories globally, we are currently tracking the traffic to 73,000 ecommerce websites. From this list and drawing on Knowledge Partner research, we hone in on those retailers that are significant enough plausibly to warrant inclusion on our regional lists. In the case of the Australian market, we have done additional research into the largest 500 websites by traffic.

We have also catergorised these companies broadly into traditional retailers, brands and marketplaces. Of the Top250 companies, we found that one in four is a brand and, while fewer than 20 of the Top250 are marketplaces, they take a disproportionately large proportion of traffic .

As we apply performance metrics to the companies on this initial list over the coming months, the list will be reordered according to their individual results to create a performance-based Top250 and a ranking of excellence. Now we have a benchmark in three different markets – Australia, the UK and Europe, and with the Association of Southeast Asian Nations (ASEAN) area to follow – we will be able to compare performance across territories and offer a unique, data-supported perspective on where the most innovative ecommerce and cross-channel retail practice is taking place.

The above examples offer early indications of the insights and challenges ahead as we move from sizing the market and the Footprint to our detailed work on the six Performance Dimensions of operating capability – where as we have already noted, we move from a view as to the ‘biggest’ to a considered assessment of which retailers are the best.

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