Online retail sales surge in April

The latest data for online retail sales have shown once again the digital world is faring better than bricks-and-mortar, providing some hope despite recent lacklustre industry results.

The results from NAB comes alongside complaints earlier this week from the retail industry that an unseasonably warm autumn has caused a build-up of winter stock among some retailers, which will be forced to sell at a discount.

The latest NAB statistics show Australians spent $13.5 billion online in the year to April, equivalent to about 6% of bricks-and-mortar spending.

After a dip in March, April recorded 23% growth year-on-year for online sales, with the strongest growth recorded in fashion, daily deals and media – three industries which have typically recorded strong online spending.

Strongest spending per capita was recorded among those aged between 25 to 54 years old, with residents in the Australian Capital Territory, Northern Territory and Western Australia. Regional WA has recorded the highest growth rate for per capita spending.

NAB chief economist Alan Oster said in the bank’s report it was “encouraging” to see a gradual lift among retail sentiment in April, and noted online sales represent 6% of all spending, up from 5.2% at the same time last year.

“While we’re seeing businesses take a multi-channel approach by developing an online presence alongside a traditional storefront, growth rates among businesses remains mixed,” he said.

“However, encouragingly, online sales have grown by over $2 billion in the past year, evidence that retailers are becoming more sophisticated in how they engage with their customers.”

Based on the share of spend, department and variety stores took the biggest slice at 36%, which coincides with David Jones’ announcement this week that online sales have continued to grow well.

Homewares and appliances followed at 18%, followed by groceries and liquor at 14% and media at 11%. Games and toys were the smallest group for total spending, at just 2%.

Once again, domestic retailers dominated spending with 72% of all money spent, slightly below the average level of last year but above the low of 71% in July 2012.

But the growth in spending isn’t the only positive. Telsyte senior analyst Sam Yip told SmartCompany not only is spending increasing, but average spending has increased as well.

“We’re seeing the average price point increase, so we’re seeing people spend more on high-price travel deals and restaurants and so on.”

Daily deals sites, which are regularly some of the most popular online retail destinations, have been experimenting with more pricey travel products.

Yip also points to the share of spending being directed towards department stores, saying while the increase in spending is encouraging, department stores still lag behind the rest of the industry.

“It is encouraging, but the scale is quite small. These sorts of companies need to realise they can operate significantly differently from their bricks-and-mortar operations.”

“Once you move online, it’s all about range.”