By the numbers: AU up to the online challenge?

Summary:The latest figures show slow growth in the retail sector, and categories that can easily be bought online from overseas are struggling the most.

The latest figures show slow growth in the retail sector, and categories that can easily be bought online from overseas are struggling the most.

It's been the perfect storm for retailers: more people exposed to the expanded range of goods available online, a financial crisis that pushed prices down all over the world, a strengthening Aussie dollar and a local industry slow to react.

The latest numbers, released last week by the Australian Bureau of Statistics (ABS), show that the retail sector grew 5 per cent between February 2011 and February 2012 — but most of that growth was in food sales.

(Credit: Phil Dobbie/ZDNet Australia)

The clothing, footwear and personal accessories segment has gone nowhere in the last few years (in fact, it's gone backwards in real terms). Is it any wonder when more than half of all 18 to 45 year olds have bought something online in the last year (according to the ABS Household User of Information Technology report)? Of those, almost half bought clothes, cosmetics or jewellery.

The ABS figures show that our spending on clothing, footwear and accessories in 2011 totalled $18.8 billion. Forrester Consulting reckons that $1.8 billion was spent online for these items last year. So, online already accounts for 10 per cent of sales, and it's still growing (against the static figures we are seeing for fashion and clothing overall).

It's interesting to note that amidst all the talk about money going overseas, most internet sales are still done through domestic online retailers. The latest Secure Insight report from PayPal (March 2012) claims that 70 per cent of online spending is accounted for by domestic operations, but that figure is undoubtedly inflated by perishable and bulky goods. The report goes on to predict that the distinction between online and offline is becoming obsolete "as consumers look to find, compare and purchase their item in the fastest, most convenient [shopping] possible." With more and more overseas retailers offering free shipping to this region, this is definitely putting the pressure on Australian operations.

So as the online boom continues (Forrester Consulting reckons that online apparel sales will take in $2.6 billion next year, up from this year's estimate of $2.25 billion), it remains to be seen whether Australia's major retailers will finally wake up to the opportunity (or threat).

Topics: E-Commerce, Banking


Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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