If you listen to the bleats from the likes of Gerry Harvey of Harvey Norman and Solomon Lew of Premier Investments (Smiggle, Just Jeans etc) the online world – especially from offshore – is nasty and unfair and that’s why from July 1 we have the now very costly (to administer) tax on imports under $1,000.
In fact if you listened to the the dynamic whiners of Australian retailing offshore online retailing is the root cause of all the problems in the nation’s malls and shops – not high household debt (from the housing boom) or near stagnant wages and disappearing savings.
But their whingeing (and that of others in the sector), has overshadowed what has been a surge in online retail activity within Australia in the past two years.
According to the May retail sales figures from the Australian Bureau of Statistics online retail turnover contributed 5.6% to total retail turnover in original terms in May 2018, a rise from 5.4% in April and 3.9% in May 2017.
Based on the original retail sales figures in the ABS report online sales in May were around $1.45 billion, (or original turnover in May of $25.954 billion) up more than 48% from the May, 2017 figure of $980 million.
That is a significant increase, but even more astonishing was the 81% from May 2016 when the ABS estimated that online sales were 3.2% of original turnover (that is not trend or seasonally adjusted) of $23.995 billion, or $768 million. In comparison the rise in original sales totals from May 2016 to May this year was just 8.1%.
Looking at spending in the lead up to Christmas in December (which is the highest spending month for retailing) provides confirmation of the surge. The ABS said online accounted for 4.8% of original turnover of $33.63 billion, or $1.61 billion in December 2017.
That was up from 3.8% of December 2016’s original turnover of $33.1 billion or $1.257 billion. That’s a solid rise of 28% or so in a year.
The ABS doesn’t break down its estimates, but the economics team at the National Australia Bank does in its estimates – in fact the NAB reckons online retail spending is around 8.3% in the year to May, or around $26 billion.
The NAB saw online retail spending “Generally moderate slowing for six of nine categories in May, but all maintain double digit 12-months to growth.” The economics team estimated “the fastest 12-months-to growth was recorded by Games and Toys stores, whose sales accelerated (29.5% May vs 26.6% 12 months to April). Department stores (23.5%) recorded the second fastest growth, but slowed from April (25.6%). The much larger sales category, Media (21.8% vs 24.2%), was third fastest in 12 months to terms, but also slowed, along with Grocery and Liquor (20.8% vs 21.3%).”
"The recent resurgence in Fashion continues, with growth accelerating again (16.5%vs 15.4%). Personal and Recreational (11.9% vs 13.1%) slowed, along with the largest spend category Homewares and Appliances (11.8% vs 13.4%), and smallest category Daily Deals (11.6% vs 20.6%). While Food Catering had a marginal increase in growth (10.7% vs 10.5%), it was the slowest category in May.”
What would handy is for ASIC to direct listed companies with online operations to start breaking out those sales with appropriate comparisons.
