National Australia Bank’s (NAB) latest Online Retail Sales Index shows Australians spent $14.9 billion online in the year to January 2014, up $1.9 billion or 11.3% on the previous year.
While online sales slowed marginally to 1.3% in January, the overall improvement in recent months means online sales are far outstripping traditional retail in terms of growth.
Strong year on year growth was experienced in Groceries and Liquor (+27%), Electronic Games and Toys (+22%) and Media (+18%), though Media has lost pace in recent months. Daily Deals and Personal and Recreational Goods experienced the weakest growth.
A substantial gap also now exists between growth in domestic and international online retail sales. International online sales have virtually stalled in recent months, with seasonally adjusted three month moving average growth just 0.3%. This slowdown is likely tied to the lower AUD.
By comparison, domestic retailers continue to control the largest share of online sales, which has edged marginally higher to around 74% of the market.
Commenting on the findings, NAB Chief Economist Alan Oster said that despite a recent pick-up in traditional retail growth, it was still outpaced by the improvement in online retail.
“With the improvement over recent months, online sales have returned to growth rates far exceeding traditional retail sales,” he said.
“In the year to January, the main contributors to the growth in online retail sales have been Department and Variety Stores, Media and Groceries and Liquor – which together accounted for 74.4% of the total increase in sales.”
NAB’s Retail Sector Head, Tiernan White said: “We are seeing our domestic retailers increasingly developing a quality online presence alongside their traditional bricks and mortar offering.”
“The Department and Variety Stores category recorded the highest share of total online expenditure in the year to January at 34%, followed by Homewares and Appliances with 17% share of spend and Groceries and Liquor with 15% share of spend.”
Online sales were equivalent to around 6.5% of traditional retail spending, up from 5.8% for the same time last year.
Key findings –
What have been the growth trends for online retail? Online retail sales slowed over the year to January to 11.3% (from 12.9% in December), though this rate is much improved when compared to August 2013. In January, monthly online retail sales grew by 1.3% (on a seasonally adjusted, three month moving average basis). This level was slower than December (1.6%) but faster than January 2013 (1.2%).
Spending patterns – In the year to January, the main contributors to growth were Department and Variety Stores, Media and Groceries and Liquor – which together accounted for 74% of total growth. The weakest growing sectors in recent months were Daily Deals and Personal and Recreational Goods.
Who are the big spenders? Online shopping continues to be dominated by Australians aged 35 to 44, who spend 34% more than the national average online. They are followed by those aged 25 to 34 and 45 to 54. Over 65’s spend the least online, at roughly half the national average.
Spending by age – Under 25’s spend comparatively more than average on Fashion, Media and Electronic Games and Toys, and comparatively less on Groceries and Liquor. Over 65’s spend less on Fashion and Department and Variety Stores and more on Groceries and Liquor.
Domestic retailers edging even higher – Domestic retailers remain the dominant force in online retail sales, with around 74% of the online retail market. This share has edged marginally higher across the past few months – reflecting the comparatively weaker growth trends for international retailers over this period, possibly due to the lower AUD.
Regional to metro sales – People in metropolitan areas spend 2% more online than the national average, while regional residents spend almost 5% less. Exceptions do remain however, with regional Western Australia spending almost 26% more online than the national average.
Share of state spending – On a per capita basis, the ACT, Northern Territory and Western Australia continue to record higher online retail consumption, while South Australia, Victoria and Queensland lag.
View the full report here – nab.com.au/onlineretailsales
About the NAB Online Retail Sales Index
Based on two million non-cash transactions per day, scaled up to replicate the broad economy, the NAB Online Retail Sales Index tracks online retail spending across sectors, demographics, locations and the breakdown of goods bought from domestic and international online retailers. The index is produced monthly and analysis is provided on a quarterly basis.
NAB Online Retail Sales Index (PDF 1.05MB)
Quantium is Australia’s leading data analytics and marketing strategy firm. Quantium has worked with NAB for more than 4 years, assessing de-identified transaction data to derive insights, trends and shopping habits of different customer groups. The resulting analysis forms Market Blueprint and is used by NAB and other businesses to drive innovation and business performance through customer, distribution and marketing strategies.