FYI | Feb 27 2012
– NAB launches online retail sales index
– Index shows domestic retailers account for bulk of online sales
– Growth in online retail remains well above bricks and mortar
– Strongest growth coming from under 30s demographic
By Chris Shaw
With online shopping a booming market, National Australia Bank has joined forces with Quantium, a data analytics firm, to launch the NAB Online Retail Sales Index. The Index offers an analysis of trends in online spending in Australia.
For 2011 the Index recorded 29% growth in online spending, achieved on total online sales in Australia of $10.5 billion. Of this, almost 75% of online sales were made with domestic based retailers, the balance with overseas-based online retailers.
Of the two the growth rate for international sales is higher, growing at 40% per year compared to 25% sales growth for domestic online sales. Despite the growth, NAB head of consumer sectors, David Thorn, notes online sales still only account for about 4.9% of retail spending.
The pace of growth in online retailing slowed across the second half of 2011, Thorn noting by the end of last year growth in year-on-year terms had pulled back to around 20%. This is still well above the growth rate for traditional retail sales of around 2.5%. Online sales also showed less seasonality than traditional retail sales, though the lead up to Christmas remains the peak period for both online and traditional retail sales.
As Thorn notes, changing consumer preferences and spending habits are contributing to some structural changes in the retail sector. But with 95% of sales still coming through bricks and mortar stores, the key for retailers remains the type of goods sold, who the buyers are where the retailer is located.
This means a decision as to whether online should be introduced as a compliment for an existing business model or whether the focus should be further attempts to reinvigorate an existing physical store presence.
NAB's Index divides online retail goods into four categories, the largest being Auctions, Department Stores, Fashion, Cosmetics and Variety stores, which accounted for around 50% of all online retail goods bought in 2011.
In contrast, Thorn points out while food is traditionally the major category in physical retailing, the Groceries, Liquor and Specialised goods category is the smallest of the four in NAB's Index at just 13%.
The other two categories are Home, Furniture, Appliances and Electronics and Recreation, Toys, Games and Hobbies, Music, Movies and Books, both of which account for around 20% respectively of all online retail sales.
In demographic terms, the Index showed online spending is concentrated among people aged in the 40s, 30s and under 30 age group, each accounting for around 23% of total online sales. While those in their 30s and 40s make the most purchases, the strongest growth in online sales is coming from the under 30s age group.
From a geographical perspective NAB's Index showed New South Wales accounts for 35% of online retail spending, following by Queensland and Victoria. The strongest growth in online spending over the past two years has come from Western Australia.
The NAB Online Retail Sales Index will be produced monthly.
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