Restrictions enforced due to the COVID-19 pandemic separated many families and friends for special occasions such as birthdays, Mother’s Day and anniversaries. While lockdown rules limited potential revenue generated from gift options brought at traditional bricks-and-mortar stores, it represented an expansion opportunity for online retailers. Online shopping surged during the pandemic, which included purchases intended as gifts, allowing Australian consumers to connect with friends and family from afar. Online purchases have the unique ability to be delivered to the receiver’s door, making it the preferred option for Australian consumers separated by state or international border closures. Limited trading of experience-based gifts, such as special dinners or cinema viewings, due to restrictions has supported an increase in online-bought gifts.
Popular gift options
Flowers and liquor were two popular gift options during the COVID-19 pandemic due to the way they can be ordered. Online purchases usually take a number of days to be shipped and are limited in the ways they can be personalised. However, online flower and liquor sales are often available for same day or set day deliveries. Many online flower stores also give the option of add-ons such as a note, chocolate or candles, allowing the gift to be personalised.
With most Australians remaining inside during mandated lockdowns, this factor also boosted demand for flowers, as people looked for something to brighten their homes while staying inside for a prolonged period. The Online Flower Shops industry benefitted from this trend, with revenue growing by 11.5% in 2019-20, and expected to rise a further 6.4% in the current year. Online stores that offer personalised gift items and contactless delivery were especially popular with consumers during lockdown.
Australians often use liquor as a gift as the wide variety available can cater to all types of preferences and budgets. Revenue for the Online Beer, Wine and Liquor Sales industry grew by 22.3% in 2019-20, and is anticipated to rise by a further 27.2% in 2020-21. However, a significant proportion of this revenue growth can be attributable to consumers purchasing products for themselves and not as gifts for others.
Expansion to online markets
The COVID-19 pandemic saw a jump in online service enterprises as many businesses expanded or adopted internet services to remain viable. In response to constrained demand from flower-heavy events such as weddings and funerals, many traditional flower shops expanded into the online market. Many flower shops not previously online already offered delivery services, making the transition for these businesses easier. Transitioning online has expanded the potential customer base for businesses, by attracting demand from interstate customers. This trend has contributed to a 11.6% increase in enterprises in 2019-20.
Enterprises in the Online Beer, Wine and Liquor Sales industry increased by 8.9% in 2019-20. While the rise is significant, several factors likely constrained additional growth:
- Liquor retailers were considered essential services throughout the COVID-19 pandemic, making the move online less vital.
- Liquor can be sold through several popular online food ordering services, reducing the need for liquor retailers to set up online stores.
- The online market is dominated by large the supermarkets, Coles and Woolworths, which have the ability to invest large sums in advertising, which smaller businesses may not be able to afford.
Future Growth
With the risk of COVID-19 transmissions continuously declining in Australia, operators in both industries are anticipated to face higher external competition. These industries have benefitted significantly from restricted trading of brick-and-mortar stores. As COVID-19 restrictions continue to be eased, trading activity of brick-and-mortar retailers and experience-based businesses has increased. Restaurants, cinemas and concert halls have resumed operating schedules, expanding the variety of gift options available. However, flowers and liquor are likely to remain popular gift options and demand through online services is projected to remain strong. Nevertheless, revenue growth in both industries is projected to be slower over the next five years. Revenue for the Online Flower Shops industry is anticipated to grow at an annualised 3.8% over the five years through 2025-26 to $385.9 million. Growth in the Online Beer, Wine and Liquor industry is forecast to remain high due to a higher proportion of sales being personal purchases, with revenue forecast to rise at an annualised 7.9% over the five years through 2025-26, to $2.6 billion.
IBISWorld Industry reports mentioned in this release:
