Some big, traditional retailers have seen the need to embrace the online challenge.

So-called "showrooming" and "click and collect" will be two major retail trends in 2014, according to an industry commentator who says businesses that fail to embrace the changes taking place in the sector will find themselves increasingly marginalised.

Jon Bird, chairman of retail marketing specialists IdeaWorks, said retailers needed to understand that New Zealand was no longer a couple of "islands at the bottom of the world" and the growth of online shopping meant consumers could purchase products from across the globe.

Kiwis spent $2.7 billion online in the year to September, with almost 40 per cent of that spending going to overseas retailers, according to the BNZ Online Retail Sales Index.

When national children's clothing retailer JK Kids announced in November that it was closing down, its boss blamed intense competition from overseas websites, as well as the global economic downturn, for the chain's demise.


"Retailers need to appropriately digitise their businesses and make sure it's very sharply positioned," Bird said, adding that businesses also needed to harness the power of data collection to gather information on their customers' shopping habits.

He said the rise of showrooming - shoppers examining products in a bricks-and-mortar store and then purchasing the same or similar goods online for a cheaper price - had been driven by growth in the use of smartphones, which gave consumers the ability to conduct online research while in a retail outlet.

Click and collect, which involves purchasing products online and then picking them up from one of the same retailer's physical outlets, was proving popular with consumers who wanted to avoid the hassle of having to be at home to receive a courier delivery, as well as those who simply didn't want to wait for the item to be delivered, Bird said.

"I think click and collect will really come into its own this year."

Bird said The Warehouse Group was a good example of a major, traditional retail business embracing the online challenge and taking a multi-channel approach to retailing.

During 2013 the company acquired stakes in a number of internet retailers, including online sportsgear seller Torpedo7 and pet store

The firm also launched click and collect at its Red Sheds stores in October and at that time chief executive Mark Powell said there was scope for the company to offer a single collection point for products bought online across its various retail brands, which also include Noel Leeming and Warehouse Stationery.

Kathmandu is in the process of developing click and collect in its stores, while children's clothing retailer Pumpkin Patch launched the service in 2012.

New Zealand Retailers Association chief executive John Albertson said one of the biggest issues facing retailers was the need to protect margins. "We've had a number of years where the level of discounting has been very high."

NZ retail sales reached $52.8 billion in the year to the end of September 2013, a 3.7 per cent increase.

Key trends for 2014
Showrooming: When shoppers look at a product in a physical retail store and then buy online for a cheaper price.

Click and collect: Buying products online then picking them up from the same retailer's physical outlet, instead of using a courier.