Goldman Sachs has released a report that reveals that a lack of capital expenditure by Australian retailers has hindered their ability to capitalise on internet sales.
The report, authored by analyst Phil Kimber, said that the likes of Myer and David Jones have been so fixated on providing generous dividends to shareholders that they have failed to invest capital in the technology required to take advantage of the online sales boom.
Myer's capex has dropped from a high of 4.8 percent of sales in 2008 to 1.9 percent in 2012. David Jones spent five percent of sales on capex investments in 2009, but this fell back to 3.9 percent in 2012.
The Goldman report recommended Australian retailers tackle the direct targeting of domestic consumers by foreign brands.
“We believe Australian department stores will need to increase their investment in the online space,” it concluded, by lowering dividend payments and boosting capital expenditure.
The report cites a specific example Australian retailers could follow. British retailers Debenhams and Marks & Spencer have boosted their online sales over the past five years from levels near those current experienced by Australian retailers to nearly ten percent of all sales.