In retail we trust

Pacific Brands chief executive Sue Morphet made a really interesting point about online retailing yesterday in a speech to the Australian Institute of Company Directors in Brisbane.

She said Australian online shopping remained three to four years behind the United States and Britain, but local consumers are quickly catching up.

“They’re getting used to online shopping, and that familiarity brings another important growth factor – trust,” she said.

“Online shoppers now trust the system, and trust that they won’t get ripped off.”

The idea of trust is an interesting one. For many years “trust” in online retail has been all about security. Consumers were naturally worried about sending their credit card and banking details to far off places, although time has well and truly taken care of these concerns.

As Morphet says, shoppers know they will not get burnt by retailers who take their money and never send their goods.

But perhaps we can take this matter of trust a little further.

The proliferation of shopping comparison sites, group buying sites, daily deal sites and other discount sites means that consumers also trust online retailers to provide the best price for whatever it is they buy.

They trust that whatever they find in a shop, they will find it cheaper online in the majority of cases. They understand how margins work and how online players like Amazon accept low margins in return for high volume.

But if trust in online retailers is rising, has trust in physical retailers been eroded?

In some cases – books, CDs, luxury goods, electronic equipment are all examples – the internet has shown consumers that traditional retailers have been taking advantage of a lack of competition by stinging shoppers with big mark-ups.

Yes, traditional retailers have bigger cost bases than their online counterparts, and so must charge bigger mark-ups.

But in their current ultra-frugal mood, consumers would seem to have little time for this argument. Consumers want stuff cheap, and I wonder if there is a danger that those physical retailers charging higher prices are all labelled as rip-off merchants.

It’s highly unfair, but it’s another symptom of the blurring of the lines between online and physical selling.