By Claire Reilly
NAB released its Online Retail Sales Index for the month of January today and, while online sales growth continues to outstrip growth in traditional bricks and mortar, domestic online retailers are now getting a bigger slice of the sales pie.
According to NAB group chief economist Alan Oster, online sales rose to an estimated figure of $13 billion for the year to January 2013 —equivalent to 5.8 per cent of traditional bricks and mortar sales. By comparison, bricks and mortar retailers saw a year-on-year growth in sales figures of 0.4 per cent in December 2012.
But while the online sales picture has long been daunting for local retailers, there is evidence that Australian e-commerce sites are now performing strongly, outstripping their international counterparts in terms of sales growth.
Tiernan White, retail sector head and head of NAB Corporate (NSW) explained.
“It’s clear that our domestic retailers are now fully comprehending the potential of the online retail channel,” said White. “Our latest Online Retail Sales Index reveals that this constituency, who account for almost three quarters of sales, have continued to record strong growth in recent months and outpace international sales growth.
“Domestic sales increased by 28 per cent year-on-year in January, compared with 25 per cent year-on-year for international retailers.”
This a vast improvement from just two years ago, when international retail sites were experiencing sales growth in the order of 50 to 65 per cent, compared to domestic growth around the 30 per cent mark.
It appears that, although Australian consumers are hitting online stores more and more, they are still happy to shop from home-grown websites, with domestic online retailers accounting for approximately 73 per cent of total online sales.
According to White, there is an opportunity for local retailers to use online sites to their advantage, and to boost their bricks and mortar offering.
“The key for retailers is to ensure their online offering complements and supports their core business,” said White. “Successful retailers are providing their customers with alternative ways to shop. In return, the retailer can generate additional sales activity not based on store-wide heavy discounting.”
NAB also tracked spending habits across different retail categories, with “Online Auctions, Department Stores, Fashion, Cosmetics, Variety Stores” accounting for 38 per cent of the total spending. The “Home, Furniture, Appliances, Electronics” category accounts for 19 per cent of total spend, with those in the 50-60 and 60+ age groups more likely to spend on this category than younger consumers. Overall, the category has had a mixed performance.
“From mid 2011, we’ve observed a relative underperformance in [the Home, Furniture, Appliances, Electronics] sector — with growth rates consistently weaker than average until November 2012.
“The last three months have seen above average growth rates for the sector (particularly in November) — which is unusual by past standards. Though growth year-on-year has remained strong in January, the index has come off somewhat. This spike in growth coincided with the launch of the iPad Mini and MacBooks with retina display in early November.”
By Claire Reilly