Department store shoppers are nearly twice or more likely to shift their spending towards ultra-cheap global competitors Shein and Temu than the average Australian, according to market research firm Roy Morgan.
New data shows that David Jones shoppers are almost twice as likely as the average Australian to shop at Temu, while Myer shoppers are 67 per cent more likely.
As for Shein, David Jones shoppers are almost three times more likely than the average Australian to shop on the platform, while Myer shoppers are twice as likely.
This comes as Roy Morgan projects a stunning rise in revenues by both online giants, with Shein’s annual sales estimated at $1 billion and Temu’s at $1.3 billion in the Australian market.
Looking at other key online marketplaces, Kogan.com recorded a full-year revenue of $260.1 million in FY23, down from $363.8 million in FY22, while The Iconic recorded a net merchandise value (NMV) drop of 14.3 per cent to €369 million (AU$610.61 million) for the 2023 calendar year.
Roy Morgan claimed that the rise of Shein and Temu comes amid a perfect storm, brought on by the cost-of-living crisis coupled with the normalisation of online shopping.
Shein now has close to 800,000 shoppers each month in Australia for clothing and accessories, which is set to grow now that the online marketplace has expanded into categories beyond apparel.
Meanwhile, thanks to a mix of ultra-cheap prices, free delivery and aggressive marketing and media spend, Temu has built a large customer base, with 1.26 million Australians shopping each month - all in just one year of entering the market.
Other data showed that retired Australians - who ramped up their app usage over COVID - are also over-represented among Temu shoppers, and 3 in 10 Temu shoppers are men, while 80 per cent of Shein’s shoppers are women.
“The only way to truly understand the scope of internet only retail businesses, like Shein and Temu, is through interviewing tens of thousands of Australians,” Roy Morgan CEO Michele Levine said.
“Roy Morgan interviews a representative cross-section of over 65,000 Australians each year to obtain a fully rounded understanding of the lifestyles, attitudes, media consumption habits and other key factors that drive purchasing decisions.
“Shein and Temu have surprised everyone, few could have predicted that a mass market for ultra cheap throw-away retail existed in Australia. Certainly, cost of living pressures have fueled both Shein and Temu’s stunning rise as Australians look to get more for their dollars.
“But it remains to be seen whether Temu will really stick – the current numbers indicate that a lot of people are trialling the platform, so we’ll see if that holds over 2024 as customers assess the quality of products that arrive at their door.
“And of course, the longevity of these platforms is unknown, especially Temu, as we wait to see how its aggressive loss-making customer acquisition strategy – driven by huge digital search spend and free-delivery – unfolds.”