National Australia Bank’s (NAB) latest Online Retail Sales Index shows Australians spent $16.9 billion online in the year to April 2015, up 9.6% on the previous year.
Online sales are now equivalent to around 7.0% of traditional retail spending, up from 6.6% for the same time last year.
Electronic games and toys had the fastest annual online sales growth at 31% over the year to April and 10.4% higher than the previous month.
Homewares and housewares continued to recover from the January slump with the second highest growth in year-on-year (14.5%) and 4th highest in month-on-month (1.2%) terms.
Other key growth categories in the month included media, fashion and department stores. Daily deals (-0.5%), grocery and liquor (-0.7%) and personal and recreational goods (-0.8%) all contracted in the month. In year-on-year terms,only daily deals (-16.0%) sold less than the prior year.
Department and variety stores continue to dominate the online retail sector, having 33.2% of total online spending. The second largest category, homeware and appliances, had a 16.8% share of spend, followed by groceries and liquor (15.3%), media (12.4%), fashion (11.4%), personal and recreational goods (5.5%), electronic games and toys (2.7%), and daily deals (2.7%).
NAB Group Chief Economist Alan Oster said retail trade continues to grow faster than traditional retail.
“Comparable year growth in traditional bricks & mortar retail (up 5.3% in March) was still outpaced by the improvement in online retail (8.2%). That said, recent online growth has been more subdued than the 20-30% year-on-year growth rates recorded in earlier years. In April the seasonally adjusted month-on-month change was 1.5%. At 0.6%, the trend estimate for online retail sales is unchanged relative to March and February,” he said.
“Domestic retailers controlled 75.5% of total online spending as of April 2015, relatively unchanged on the previous 3 months. Growth in both international and domestic online retail sales accelerated in April, though domestic online continues to outpace international in year-on-year terms.”
NAB Head of Consumer Sectors Australia, Peter King, said the 35-44 age group continued to dominate online spending.
“At almost a quarter of all online spending, the 35-44s are the largest spend group, but spending by the 25-34s grew fastest in April.
“The growth in online shopping by older Australians has been encouraging, although this has slowed in recent months, and was the slowest in April”, he said.
Key findings –
What have been the growth trends for online retail? At +1.5%, online retail sales accelerated in April from +0.8% in March. At 0.6%, the trend estimate for online retail sales has flatlined for the past three months
Spending patterns – Department and variety stores continue to dominate the online retail sector, having 33.2% of total online spending. The second largest category, homeware and appliances, had a 16.8% share of spend, followed by groceries and liquor (15.3%), media (12.4%), fashion (11.4%), personal and recreational goods (5.5%), electronic games and toys (2.7%), and daily deals (2.7%)
Who are the big spenders? Although those aged 35-44 make up approximately 17.4% of the adult population, their share of online spend is the highest at 24.3%. In contrast, those aged 65 and over have a disproportionately lower share of spend (8.6%) relative to their share of population (18.6%)
Spending by age – There were mixed results in April, with monthly growth accelerating for those aged 18-24 (1.3%), 25-34 (3.6%) and 45-54 (1.6%). Those aged 35-44 (0.7%), 55-64 (0.5%) and over 65s (0.1%) slowed from the previous month. Though representing the lowest for share of spend, the over 65s have had the second highest year-on-year growth.
Domestic retailers edge higher – For domestic online retailers, growth accelerated in April, at 1.4%, compared to 1.1% in March. The result was similar for international sales which also accelerated from 0.6% in March to 0.9 % in April.
Regional to metro sales – Metropolitan residents spent on average around 7.0% more than those residing in regional Australia. However, those living in regional WA spent 22.1% more than the average Australian, along with WA metropolitan residents at 12.1% more.
Share of state spending – On a per capita basis, the ACT, Northern Territory, Western Australia and NSW spent more than the national average. In the ACT, where only 1.6% of Australians live, 2.0% of total online purchases in dollar value terms were made. Similarly, in WA, 11% of Australians made 11.9% of total online purchases.
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 in-depth analysis is provided on a quarterly basis.
About Quantium
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.
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