Domestic retailers are driving a majority of online sales, which continues to pickup at record growth rates, the NAB Online Retail Sales Index for October reveals.

The NAB Online Retail Sales Index has continued to trend upwards in recent months to 209 points in October 2012. In October, online retail sales grew by around 26 per cent year-on-year, compared with the low point of just 14 per cent year-on-year in May. During the 12 months to October 2012, Australia’s online retail spending totalled around $12.3 billion.

From October’s rate, domestic retailers – defined in our index as those that are Australian for tax purposes – controlled the majority of online retail sales in Australia. From late 2010, the share of domestic sales has trended around 73 per cent. In recent months, it has edged slightly higher to 74 per cent.

“What is of primary interest in our latest NAB Online Retail Sales Index is the growth our domestic retailers have experienced compared to their international counterparts,’ Tiernan White, retail sector head and head of NAB Corporate (NSW), said.

“We’re seeing strong online growth from local retailers as online becomes an integral sales and distribution channel. In part, this can be attributed to retail businesses understanding their customers’ channel preferences and responding accordingly by providing their customers with choice in how they engage and make their purchases.”

But when compared with traditional bricks and mortar retail sales the level of online spending remains quite modest. For the year to September 2012, traditional retail sales totalled $221 billion – indicating that online sales are equivalent to around 5.6 per cent of the traditional sector.

With saying that though growth rates for the traditional retail sector was recorded by NAB to be far more modest – coming off a considerably larger base – with an increase of 2.2 per cent year-on-year in September (on a non-seasonally adjusted basis).

When seasonal factors are included, growth rates for the traditional sector have eased slightly in recent months, back to around 3 per cent year-on-year in October.

“The opportunities and challenges faced by our retail clients, both domestic and international, online and traditional, high street versus shopping centres, has a direct flow-on effect and implications for other sectors from transport, logistics and property,” White said.

“Many of our clients in these sectors have drawn upon the insights in this Index as they adapt their business models to the ever-changing landscape of Australia’s retail sector – investment, innovation and adaptability are all crucial ingredients for success.”

(Click to view a larger image)