Online retail is doing better than ever and is smashing records along the way. According to NAB Online Retail Sales Index, online retail in April 2020 grew 19.5 percent YoY.
The NAB Online Retail Sales Index reported that April’s rapid growth is the highest recorded monthly growth in the series’ history.
“These are the highest growth rates we have recorded in the history of the current series, running since 2012,” said Alan Oster, the Chief Economist at NAB.
“Similar growth rates have been recorded in overseas comparisons. The Office of National Statistics in the UK, for example, reports that online grew at 15.8 percent in the month. With the rapid growth in the series, and slowing in overall ABS retail estimates, online as a proportion of total retail sales is now 10.4 percent of all sales, up from 9.7 percent a month prior.”
Furthermore, the ABS recorded that online retail contributed 11.1 percent of retail turnover.
“The ABS has recorded that online retail turnover was $2.62 billion in April, this is $1.13 billion higher than April last year, a 76 percent increase YoY,” said David Fear, the Head of Analytics at Power Retail.
“We have seen words like unprecedented, seismic, etc. used to describe the shift to e-commerce. This ABS data provides us with some hard numbers to back this up, where e-commerce was a mere 6.3 percent of total retail in January, this is now as high as 11.1 percent in April.”
The Big Picture
It’s not all sunshine and roses, though. And this is for obvious reasons. The ABS recorded that retail turnover was down 17.9 percent in April.
“COVID-19 continued to affect retail trade in April with many retail businesses closing their physical stores during April due to restrictions relating to social distancing,” said Ben James, the Director of Quarterly Economy Wide Surveys.
COVID-19 played the most significant role in this drop, which has also maximised the boom of online in recent months.
“In the month, growth was strongest for the smallest sales category, takeaway food, which returned to growth after contracting in March. Second smallest spend share category, games and toys, has grown strongly over the past couple of months, so much so that its share of online has increased from about six percent 12 months ago, to almost eight percent now,” said Oster.
“It seems that online activity by category has moved somewhat in phases over the past three months, initially led by strong growth in grocery and liquor as panic buying took hold. While that category continues a pace, a focus on home improvement and working from home were clear gains in March and April. Possibly with the easing of lockdown measures, and some consumers still reluctant to go to physical stores, online fashion has re-emerged as a growth area after months of below average and negative sales growth.”
Interestingly, there have been increasing popularity with local retailers, outdoing the international counterparts in April.
“The largest sales share for international merchants, fashion, was far outpaced by their domestic-based counterparts,” the report found.
via NAB Online Retail Sales Index
State by State
Three major states represent ‘just over 80 percent’ of all online sales, the NAB Online Sales Index reported. “Of these three states, online sales growth in Victoria and NSW grew most rapidly, with smaller spend share state, Tasmania leading overall growth,” Oster said. Online spending has higher growth rates in metropolitan areas, the report found.
via NAB Online Retail Sales Index
While the online boom is evident, what’s left uncertain the future of retail. The results in April were 53 percent higher than Power Retail’s prediction, “moving us into extremely unpredictable territory,” said Fear.
“While a worrying sign for retail, these results highlight the extent to which consumers are moving online – this is becoming an increasingly interesting space to analyse.”
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