NAB Online Retail Index Oct 2012.pdf

7/30/2019 NAB Online Retail Index Oct 2012.pdf

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NAB Online Retail Sales Index

Indepth report October 2012

nAustralias online retail sales are continuing to climb, up

to A$12.3 billion in the year ended October 2012, but ornow the share o total spending is still modest, at around

5.6%. The rate o growth in online sales has strengthenedconsiderably over the last six months, ollowing something

o a slowdown in the early part o 2012, with growth oaround 26% year-on-year in October, compared with 2.2%or traditional retailing in September.

Domestic retailers have driven the growth in online sales

over recent months, with international retailers lagging alittle behind. Domestic retailers have been the dominant

players in the online space, accounting or almost three-quarters o sales in the year to October.

Those aged in their 30s and 40s remain the key demographic

or online spending, with the under 30s age group laggingon a per capita basis although they do record marginally

aster growth rates than any other age group.

The strongest spending patterns are in the Australian CapitalTerritory, the Northern Territory and Western Australia, with

the latter outperorming the bulk o the country in growth at 36% year-on-year in October.

This is just a snapshot o the wealth o inormation

contained in the NAB Online Retail Sales Index. Enjoy therest o the report.

Alan Oster, Group Chief Economist, NAB

nWhat is o primary interest in our latest NAB OnlineRetail Sales Index is the growth our domestic retailers have

experienced compared to their international counterparts.Were seeing strong online growth rom local retailers

as online becomes an integral sales and distribution

channel. In part, this can be attributed to retail businessesunderstanding their customers channel preerences andresponding accordingly by providing their customers withchoice in how they engage and make their purchases.

The opportunities and challenges aced by our retail clients,

both domestic and international, online and traditional,high street versus shopping centres, has a direct ow-on

eect and implications or other sectors rom transport,logistics and property. Many o our clients in these sectors

have drawn upon the insights in this Index as they adapttheir business models to the ever-changing landscape

o Australias retail sector investment, innovation andadaptability are all crucial ingredients or success.

Tiernan White, Retail Sector Head & Head of NAB

Corporate (NSW)

2012 National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686

Retail sales (ex. takeaway food)Online Index

Chart 1: Growth in online sales vs. retail

sales (%, yoy)

Jan- Jul- Jan- Jul-

Chart 2: Growth in online sales by retaillocation (%, yoy)

Jan- Jul- Jan- Jul-

InternationalDomestic

Table 1. Key online retail statistics

Index points yoy growth (%)

Aug12

Sep12

Oct12

Aug12

Sep12

Oct12

OnlineIndex

210.1 200.4 208.7 21.7 23.4 26.4

Domesticsales

201.3 192.3 202.0 22.2 24.9 28.0

Internationalsales

238.1 226.4 230.2 19.9 19.1 21.9

All data is non-seasonally adjusted (nsa). Online sales data is produced by Quantium.Traditional retail sales data is sourced rom the Australian Bureau o Statistics (ABS).


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22%26%

Growth in traditionalretail sales (September)

At a glance

Domestic vs international (nsa, October yoy)Traditional vs online (nsa, October yoy)

Growth in onlineretail sales

2.2%

Growth in domesticonline retail sales

Growth in internationalonline retail sales

5.6% Domestic online retailers accountedfor around % of total online salesOnline purchases hit A$.bn or.% of the size of traditional retailing 74%

28%

Share of spending by state

Share of spend (%) NT.%

QLD.%

SA.%

Per capita (Index)

NSW VICQLDWA SATASACT NT

.. .

. . . .

WA.%

ACT.%

TAS.%

NSW.%

VIC.%

WA Australia excl. WA

Focus on WA Growth of spend (% yoy)

Growth of spending by region

s s s +


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Online Retail Sales Indexcontinues to trend higherThe NAB Online Retail Sales Index has continued

to trend upwards in recent months, to 209 points

in October 2012 (chart 3).

During the 12 months to October 2012, Australias

online retail spending totalled around A$12.3 billion.

When compared with traditional bricks & mortar

retail sales, the level o online spending remains

quite modest. For the year to September 2012,

traditional retail sales* totalled A$221 billion

indicating that online sales are equivalent to

around 5.6% o the traditional sector.

As detailed on page 4, the composition o

traditional and online retail sales diers notably.

When ood & beverages are excluded rom both

series, online retail sales increases to almost 9.1%

o total non-ood spending (up rom 8.7% in July).

Online sales record a pickup

in growth rates up 26% yoyin OctoberThe rate o growth in online sales has strengthened

considerably over the last six months, ollowing a

slowdown in the early part o 2012.

In October, online retail sales grew by around 26%

year-on-year, compared with the low point o just

14% year-on-year in May (chart 4).

Growth rates or the traditional retail sector are

ar more modest coming o a considerably larger

base with an increase o 2.2% year-on-year inSeptember (on a non-seasonally adjusted basis).

When seasonal actors are included, growth rates

or the traditional sector have eased slightly in

recent months, back to around 3% year-on-year

in October.

ABS retail sales (ex. takeaway food)Online Index

Chart 3: Online index vs. retail sales

(nsa, monthly)

Jan- Jul- Jan- Jul- Jan- Jul-

Retail sales (ex. takeaway food)Online Index

Chart 4: Growth in online sales vs. retail

sales (%, yoy)

Jan- Jul- Jan- Jul-

Chart 5: Growth in online sales by retaillocation (%, yoy)

Jan- Jul- Jan- Jul-



* Traditional retail sales exclude cas, restaurants and takeaway ood to create a

like-or-like comparison.


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Domestic retailers drivinggrowth, with internationalmarginally soterRecent months have seen a steady increase in the

growth rates or domestic sales, while international

online retail sales have lagged marginally. This is in

contrast to the period between November 2011 and

July 2012, when there was a close relationship between

the two series (chart 5).

Domestic sales increased by 28% year-on-year in

October 2012, while international sales increased

by 22% year-on-year.

As we have previously noted, the large divergence

in growth rates in the frst hal o 2011 was related

to a one-o surge in international sales in late 2010.

International index more volatile in2012, and a little soter since AugustThe international index has been ar more volatile over

the last six months reecting the relatively subdued

growth rates or most o this period (compared withdomestic), along with the spike in growth in July.

Since August, the trend or international sales has been

comparatively soter. The international index was at 230

points in October, compared with 202 points or the

domestic sales index (chart 6).

Domestic retailers continue tocontrol the majority o sales

Domestic retailers defned in our index as those thatare Australian or tax purposes control the majority

o online retail sales in Australia. From late 2010, the

share o domestic sales has trended around 73%,

reecting the similar trends in growth rates or both

series (chart 7). In recent months, it has edged slightly

higher to 74%.


Chart 6: Online index by retail location(nsa, monthly)


.

.

.

.

.

.

.

.

.

.

Chart 7: Share of online sales by retaillocation (nsa, monthly)

International (RHS)Domestic (LHS)


Sector Sector Sector Sector

Chart 8: Online index by category(nsa, monthly)



Traditional toy sale peaks fordiscount department stores are now

mirrored in their online trade.Tony Davis, Quantium


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Growth in Toys & Media has slowedsignifcantly, while HouseholdGoods & Electronics lags

Share o total spend in 12 months to October 2012

48%Sector 1. Online Auctions, DepartmentStores, Fashion, Cosmetics, Variety Stores.19%Sector 2. Home, Furniture, Appliances,Electronics.

21%Sector 3. Recreation, Toys, Games &Hobbies, Music, Movies, Books.

13%Sector 4. Groceries, Liquor &Specialised Food.

We continue to observe some divergent trends between

the individual categories o online sales (chart 8).

Growth rates or Sectors 1 (Auctions, Department Stores

& Fashion), 3 (Toys & Media) and 4 (Food & Beverages)

have exhibited relatively low levels o volatility over the

last year ranging between 15% and 35% year-on-year.In contrast, Sector 2 (Household Goods & Electronics)

has been ar more volatile with this sector recording

year-on-year declines in individual months over the past

year (chart 9).

Compared with somewhat divergent trends in 2011,

there has been a convergence in the growth rates or

Sectors 1, 3 and 4, with Sector 3 recording the most

signifcant slow down. For the frst hal o 2011, this

sector recorded the strongest rates o growth, beore

slowing sharply in October 2011.

By age group, there remain some notable dierences

in spending by category with the under 30s having

a larger than average share o spending in Sectors 1

and 3, while being notably below average in Sector 4.

The profles or those aged in their 30s, 40s and 50s

are closer to the national average, while those aged 60

and over have a larger than average spend in Sector 4

(inographic page 2).


-

Chart 9: Online index growth by category(%, yoy)

Sector Sector Sector Sector

Jan- Jul- Jan- Jul-

Under 30 consists of ages 18 to 30.

Share of spend (%) Per capita (index)

Chart 10: Share of spending by age group(year to October )

Under

s s s + Under

s s s +

Chart 11: Growth of spending by age group(%, yoy)

Under s s s +

Jan- Jul- Jan- Jul-

Note: Totals may not sum to 100% due to rounding


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Per capita spending remainsdominated by the 30s and 40sThe share o spending by age group has

remained quite stable since we commenced tracking

online retail sales. In an absolute sense, those in their

40s and younger account or the majority o sales at

around 23% or each group in the year to October

2012 (chart 10). However, on a per capita basis, the

bulk o spending is recorded among those in their 30s

and 40s with the under 30s age group recording

below average spending likely a reection o their

relative lack o purchasing power.Compared with some notable divergence in growth

rates in 2011, trends in growth rates by age group have

been much more uniorm over the last year although

the under 30s have recorded marginally stronger

growth rates than other age groups or much o this

time (chart 11).

Per capita spending strongestin the ACT, NT and WA

At a state level, online spending is dominated by thelargest states with New South Wales (NSW), Victoria

(VIC) and Queensland (QLD) accounting or 76% o

total online retail spending (chart 12). However, on

a per capita basis, the ACT has the strongest level o

spending, ollowed by the Northern Territory (NT) and

Western Australia (WA).

Growth trends or NSW, VIC, South Australia (SA) and

the ACT have been relatively uniorm in 2012 and

in line with the national average (chart 13). Generally,

growth has been marginally stronger in QLD and also

stronger than average in the NT although theserates have been highly volatile, due in part to the

small population. In terms o growth, WA continues to

outperorm the bulk o the country at 36% year-on-

year in October.


Share of spend (%) Per capita (index)

Chart 12: Share of spending by state(year to October )

NSWVIC

QLD

WA

SA

TAS

ACT

NT

NSWVIC

QLD

WA

SA

TAS

ACT

NT

Chart 13: Growth of spending by state(%, yoy)

WA NT QLD SA

Nov- Apr- Sep-

VIC NSW TAS ACT

Nov- Apr- Sep-

The Group Buying sector of onlinecontinues to see rapid decline, butwe are bound to see other new

online formats emerge in 2012.Tony Davis, Quantium


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Regional Western Australia

strongly above average in percapita spending

Regional Australia continues to record stronger

growth rates or online spending than its

metropolitan peers resulting in a gradually

diminishing distinction between the two groups on

a per capita basis (chart 14). Metropolitan residents

account or the majority o total spending 71% in

the year to October 2012 but the per capita share

or this period dipped to 102.3 points (compared

with 102.5 points in July).

Trends in the metropolitan/regional split remain

divergent around the country with the spending

o regional WA continuing to increase up to 126

points (previously 123) and regional spending

outpacing metropolitan WA.

In October 2012, regional sales increased by 30%

year-on-year, compared with 25% year-on-year or

metropolitan sales. Growth rates were higher in

regional WA at around 45% year-on-year (chart 15).

Trends or the under 30s soterin WA likely lacking miningrevenue

While growth in WA online spending has been

considerably stronger than the national average,

there have been notable divergences by age group

(chart 16).

Among the under 30s, there is relatively little

distinction in the year-on-year growth rates overthe last year between WA and the rest o the

country. Under 30s in WA recorded average growth

rates o 28% over the last year, against 23% or

Australia excluding WA. On average, under 30s

in WA are less likely to beneft rom high mining

incomes either lacking the qualifcations or

experience o older age groups.

Growth rates diverge with the other age groups, as

the under 30s has the lowest growth rate in WA, but

the highest overall or the rest o Australia. n

Regional (per capita)Metro (per capita)

Chart 14: Share of spending by region(year to October )

WA NSW* AUS VICQLD Other

Metro Regional

Chart 15: Growth of spending by region(%, yoy)

Jan- Jul- Jan- Jul-

Australia excl. WAWestern Australia

Chart 16: Average annual growth rate byage group (% yoy)


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U.S DISCLAIMER: This inormation has been prepared by National Australia Bank Limited or one o its afliates or subsidiaries (NAB). I it is distributed inthe United States, such distribution is by nabSecurities, LLC which accepts responsibility or its contents. Any U.S. person receiving this inormation wishesurther inormation or desires to eect transactions in any securities described herein should call or write to nabSecurities, LLC, 28th Floor, 245 Park Avenue,New York, NY 10167 (or call (877) 377-5480). The inormation contained herein has been obtained rom, and any opinions herein are based upon, sourcesbelieved to be reliable and no guarantees, representations or warranties are made as to its accuracy, completeness or suitability or any purpose. Any opinionsor estimates expressed in this inormation is our current opinion as o the date o this report and is subject to change without notice. The principals onabSecurities, LLC or NAB may have a long or short position or may transact in the securities reerred to herein or hold or transact derivative instruments,including options, warrants or rights with securities, or may act as a market maker in the securities discussed herein and may sell such securities to or buyrom customers on a principal basis. This material is not intended as an oer or solicitation or the purchase or sale o the securities described herein or orany other action. It is intended or the inormation o clients only and is not or publication in the press or elsewhere.

2012 National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686

Alan OsterGroup Chie Economist

National Australia Bank

+61 (0) 3 8634 2927

[email protected]

Tiernan WhiteRetail Sector Head & Head o

NAB Corporate NSW/ACT

+61 (0) 2 9237 1041

[email protected]

Tony DavisDirector

Quantium

+61 (0) 2 9292 6400

[email protected]

To discuss this report in more detail please speak with your

NAB Relationship Manager, visit nab.com.au/onlineretailsales or contact:

About Quantium

Quantium is Australias leading data analytics and marketing strategy frm. Quantium has worked

with NAB or more than 4 years, assessing de-identifed transaction data to derive insights, trends and

shopping habits o dierent customer groups. The resulting analysis orms Market Blueprint and is

used by NAB and other businesses to drive innovation and business perormance through customer,

distribution and marketing strategies. www.quantium.com.au

Documents

NAB Online Retail Index Oct 2012.pdf