Dec 17 2020
What does the future hold for the Online Grocery Sales and Online Education industries in Australia?
2020 has been a significantly different year compared with the previous years due to the COVID-19 outbreak creating unexpected situations and outcomes.
The COVID-19 outbreak has encouraged tertiary education providers to fast-track plans to move courses online to remain compliant with the Australian Government’s social distancing restrictions. However, most courses are anticipated to return to classroom teaching as lockdown restrictions are eased throughout Australia.
Despite supermarket stores remaining open throughout the COVID-19 outbreak as an essential service, consumers’ changing attitudes and familiarity towards online shopping have supported online grocery sales. Two such businesses that have reported a strong rise in demand for online services as a result of the pandemic include RMIT and Woolworths Group Limited.
Online Grocery Sales in Australia
Rising consumer confidence in online shopping and increasing internet connections across the Australian population have contributed to revenue growth for the Online Grocery Sales industry over the past five years. In 2019-20, industry revenue rose exponentially by 56.0%, as the COVID-19 pandemic significantly disrupted the way people purchased groceries. Over the five years through 2020-21, revenue is anticipated to grow at an annualised 25.7%, to total $6.0 billion.
Major player Woolworths has focused on boosting online store usage rates over the past three years. The company has also established a digitally-focused division, called Woolies X. The COVID-19 outbreak and the government’s social distancing rules are expected to have significantly benefited the company’s online grocery operations.
Online Education in Australia
The migration of many tertiary courses online over the duration of the COVID-19 outbreak is expected to drive revenue growth of the Online Education industry in Australia by 19.7% in 2020-21.
For example, in response to the government’s restrictions on social distancing, tertiary education provider RMIT University rapidly expanded its business by introducing online lectures and tutorials, allowing students greater access to learning materials without needing to be physically present at any campus or facility. This rapid rollout was particularly beneficial to international students who were forced to remain overseas due to Australia’s border closures.
As of September 2020, some tertiary institutions have returned to face-to-face teaching in a limited capacity. However, a return to most physical classes is only expected to take place when the spread of COVID-19 has been largely contained for an extended period. Overall, industry revenue is anticipated to grow at an annualised 8.1% over the five years through 2020-21, to $8.2 billion.
In summary, the effects of the COVID-19 outbreak on both the Online Grocery Sales and Online Education industries include:
- Encouraged businesses to improve their online platform operations
- Fast-tracked the adoption of online grocery shopping and online education
- Allowed businesses such as RMIT and Woolworths to expand business operations and revenue streams by providing online services
The COVID-19 outbreak is projected to permanently affect the way Australians utilise online services. While Australians have been slow to fully adopt online grocery shopping, most individuals who have taken up online services are anticipated to continue using these digital platforms. Nevertheless, many Australians are likely to transition back to store-based shopping once COVID-19 restrictions are largely lifted. This trend is reflected in the Online Grocery Sales industry's forecast modest growth rate in 2020-21 of 4.9%, compared with previous years.
An economic downturn attributable to the COVID-19 outbreak is anticipated to result in rising unemployment rates over the next five years. Higher unemployment typically generates demand for higher education, as people are encouraged to upskill to improve their chances of employment. Expanding high-speed internet services, increasing acceptance of online education and continued efforts to expand access to non-traditional customers will likely support industry growth. Overall, revenue for the Online Education industry is forecast to grow at an annualised 3.9% over the five years through 2025-26, to $10.0 billion.
IBISWorld Company and Industry reports used in this release: