No Christmas cheer for online sales

ipad and gameApart from a spike in online transactions on Christmas Day when shoppers unwrapped iPads, iPhones and eBooks to download applications and games, the overall growth in online sales slowed in December, suggesting Christmas may have been a poorer one for all retailers.

Latest research from National Australia Bank has revealed online sales grew close to 30 per cent in October and November but eased to 23 per cent during December, dashing retailers’ hopes of a spending boom for the holidays.

NAB chief economist Alan Oster said the cooling off in online sales pointed to disappointing December retail trade numbers to be released on Wednesday, which would likely be negative.

“I think they will be negative, we look at this and say if online slowed then the other [segments of retail] slowed,” Mr Oster said.

The NAB Online Retail Sales Index retreated slightly for December, with the index up 23 per cent year on year. This was down from a 27 per cent lift for online sales in November and a 26 per cent gain in October.

The value of online spending in Australia in 2012 was $12.8 billion, equating to about 5.8 per cent of the size of the traditional offline retail sector.

“With the online index a bit softer, it would be indicative of probably weaker growth in sales, and from what we have seen from anecdotal evidence both in our [statistics] and some of our surveys it does suggest to us that retail was less positive than the previous year.”

NAB is forecasting the Bureau of Statistics will report national retail sales in December down 0.2 per cent, seasonally adjusted, against a fall of 0.1 per cent in November. This excludes the usual 30 per cent lift in sales for December linked to Christmas shopping.

The rate of growth for online sales continues to trump traditional bricks and mortar turnover, with that segment growing at around 3 per cent per year.

A generally low inflation environment, with some categories such as electronics and home entertainment experiencing sliding prices, along with many online sites offering free shipping, helped reduce average transaction sizes and therefore forced down overall sales by value.

Mr Oster said there was a significant increase in online transactions on Christmas Day for toys, games, music, movies and books.

“It appears that these purchases were primarily eBooks and digital music downloads – having been loaded onto devices given as Christmas gifts,” he said.

“There was also an interesting upturn after Christmas with the traditional post-Christmas sales spreading online in a more significant fashion in 2012, due in part to increased advertising last year.”

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