What happened to the tearaway Aussie growth sector (online retail). Growth has crashed in the past 12 months and shows no sign of bouncing back. From NAB:
Quote:
In the 12 months to May 2014, Australians spent $15.3 billion on online retail. This level is equivalent to 6.6% of spending at traditional bricks & mortar retailers as measured by the ABS (excluding cafés, restaurants and takeaway food, to create a like-for-like comparison) in the 12 months to April 2014. The NAB Online Retail Sales Index grew by 0.2% in May, after a small decline in April. Compared to a year ago, the online index is 5.1% higher. Comparable sales growth at traditional retailers also slowed in April, to be at 0.1%, compared to 0.4% in March. The key drivers of the index have behaved quite differently this month. Groceries & Liquor and Electronic Games & Toys continued their strength from the previous month. On the other hand, Fashion, Department & Variety Stores and Homeware & Appliances have seen a weakened growth. Growth in Media has continued to drop, and has now fallen to its lowest level in history. Daily Deals and Personal & Recreational Goods experienced negative growth again this month.
This is the question that also has David Llewellyn-Smith scratching his head over at MB. I submit the answer is not complicated: when the AUD was trading in the USD 1.00 - 1.10 range, we all jumped onto Amazon, bought all the crap we needed (and then some), and now we've got that crap, we don't need as much crap, so we're not buying as much.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
This is the question that also has David Llewellyn-Smith scratching his head over at MB. I submit the answer is not complicated: when the AUD was trading in the USD 1.00 - 1.10 range, we all jumped onto Amazon, bought all the crap we needed (and then some), and now we've got that crap, we don't need as much crap, so we're not buying as much.
That's a good guess, I reckon. Perhaps if the dollar continues to rise we will see more of it happening again.
Shopping at home has been tried many times over the years in the USA (since the seventies). Various forms from a booklet, catalogue etc where you would call a number to order, teletext delivery via Tv, cable tv channels devoted to shopping from home.
It never really became the dominant way to shop. In fact all kinds of methods failed over the years.
Now online shopping will have its place, and suit certain products and services, i.e. airline tix, concert tix etc.
But people actually like going to the shops, so I will expect this will this be the most common way to shop, even in 10years time.
I'd say it isn't helped by the demographics of the issue too though. I would guess that most online shopping is done by left-leaning Gen Y/Gen X, and with the current government I wouldn't be surprised if this particular demographic is suffering from poor consumer sentiment at the moment, not to mention rising youth unemployment...
The UK market share for online retail is continuing to grow at a steady rate of about 1 per cent a year which probably equates to 2 per cent a year for non food retail. And UK online retail has the highest market share in the world.
So it's hard to see Australia following a different trajectory and that means steady growth for twenty years
I agree that this blip is probably dollar related. Or people are paying through PayPal or are moving away from nab cards. Much less likely though.
Collecting desperation. Ex-Bp Golly April 2 2015. "I see with a slight overshoot -70% [fall in Sydney house prices] as being well within possibility"
The UK market share for online retail is continuing to grow at a steady rate of about 1 per cent a year which probably equates to 2 per cent a year for non food retail. And UK online retail has the highest market share in the world.
So it's hard to see Australia following a different trajectory and that means steady growth for twenty years
I agree that this blip is probably dollar related. Or people are paying through PayPal or are moving away from nab cards. Much less likely though.
Cost of delivery in the UK is much cheaper, and many offer free delivery.
Most of the UK shopping is internal, whereas aust is often external, taking advantage of exchange rates. Plus the website ease of use is high. On amazon, I one click and buy. It knows me, and knows my card details. Add to that sites like quidco. Plus you often pay for parking in the UK, if indeed you can park. It's chalk and cheese. The US would be more comparable.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
This is the question that also has David Llewellyn-Smith scratching his head over at MB. I submit the answer is not complicated: when the AUD was trading in the USD 1.00 - 1.10 range, we all jumped onto Amazon, bought all the crap we needed (and then some), and now we've got that crap, we don't need as much crap, so we're not buying as much.
When I read your post I thought you must have been peeking into my Amazon account. I have certainly cutback, primarily due the increased costs but also because I am concerned about the economy. Now I am saving more.
Mallard
3 Jul 2014, 06:26 AM
And UK online retail has the highest market share in the world.
So it's hard to see Australia following a different trajectory and that means steady growth for twenty years
The UK has direct access to all of europe just across the channel and is a lot closer to the north American markets than us. We are truly isolated down here and shipping costs from europe and the US are very high in comparison. Perhaps this explains it?
Household spending has slowed significantly over the past few months and, with declining real wages and budget cuts weighing on the household budget, I expect spending to be fairly soft over the remainder of the year.
Meanwhile, building approvals rebounded in May, driven by the volatile units sector, but that is likely to provide only a temporary reprieve. Housing construction will support the economy over the next couple of years but is unlikely to have a significant effect given its small share of real GDP.
With the trade balance deteriorating during the June quarter and household spending positioned to fall sharply, real GDP is set to contract for the first time since March 2011. It is time for the Reserve Bank of Australia to recognise that the economy needs a further boost and is poorly placed leading into the mining investment collapse. It should seriously consider cutting rates in the next few months.
Retail sales
The value of retail sales fell by 0.5 per cent in May, missing market expectations, to be 4.6 per cent higher over the year. This marks the second consecutive monthly decline in spending, with activity well below expectations over the past four months. This follows fairly strong growth over the second half of 2013.
Spending in April and May is 0.2 per cent below the March quarter average but we should remember that this reflects the value of activity rather than the volume of goods purchased. Even with a strong outcome in June, which seems unlikely, it appears as though consumption will contract from real GDP growth in the June quarter.
Spending on clothing & footwear and in department stores fell sharply in May, with more moderate declines for household goods and other retailing. Households are looking to cut back on discretionary spending, with spending on household goods declining for the last three months.
At the state level, the decline was driven almost entirely by Victoria and New South Wales, with the other states posting mixed but relatively small changes in spending. Both Victoria and New South Wales have experienced particularly strong growth over the past year -- potentially explaining some of the recent weakness -- and have accounted for almost 80 per cent of total spending growth over that period.
Building approvals
Building approvals rose by 9.9 per cent in May, easily beating market expectations, to 14.3 per cent higher over the year. Nevertheless, building approvals have declined in six of the last eight months and are well below their peak.
Much like the recent weakness, the pick-up in May was driven by approvals for higher-density living. They increased by around 25 per cent in May, following combined losses of 30 per cent over the previous three months.
Given the obvious monthly volatility, it is better to focus on the trend estimates. These show a sharp decline for units, while approvals for housing have stagnated in recent months and may have passed their peak.
From an activity standpoint, apartment projects typically take longer to complete and should support residential investment and the Australian economy over the next few years. On the downside, these projects are typically far riskier and more likely to be postponed or even cancelled as economic conditions change.
Based on strong population growth, housing investment should improve significantly over the next couple of years but those expecting construction to drive the Australian economy should probably temper their expectations.
If the Australian economy grows at around 2.5-3 per cent over the next two years -- optimistic in my view but consistent with the RBA’s current outlook -- residential investment would need to rise by over 20 per cent for its share of GDP to rise by 0.5 percentage points. The unfortunate reality is that housing construction is hopelessly outgunned as we try to rebalance our economy away from the mining sector.
Assessment
The household sector continues to slow and we have growing evidence that the housing construction boom will not be as great as commonly expected. Residential investment will continue to support the Australian economy over the next few years but is too small to do much of the heavy lifting.
That will be left to household spending and exports, the first of which has slowed significantly throughout 2014 and appears poorly placed over the second half of the year. Real wages are declining and the federal budget has left many households spooked. Job prospects are relatively poor and, as I noted previously, the mining sector is set to shed jobs at a record rate (The jobs picture is starting to look ugly, July 2).
The second factor, exports, has declined significantly over the past few months but should rebound somewhat over the remainder of the year (Making sense of a trade deficit blowout, July 2). Nevertheless, the economy is facing an economic contraction for the first time in three years. With mining investment set to collapse, the RBA will need to cut rates to free up the household sector and encourage the dollar to depreciate further.
Cost of delivery in the UK is much cheaper, and many offer free delivery.
Most of the UK shopping is internal, whereas aust is often external, taking advantage of exchange rates. Plus the website ease of use is high. On amazon, I one click and buy. It knows me, and knows my card details. Add to that sites like quidco. Plus you often pay for parking in the UK, if indeed you can park. It's chalk and cheese. The US would be more comparable.
Australia still has no highly-developed online retailers. I don't know about anywhere else, but the US and China are seeing a wholesale change in the structure of the channel between the manufacturer and the end-user. In particular, we are seeing the retail channel consolidating.
Here in Beijing I can go to jd.com.can and buy absolutely anything from fresh vegetables and milk up to high-end Hi Fi gear. It is like Amazon on steroids, or wal-mart online. Some of the sales are in-house, and some is farmed out to specialist suppliers who operate under the website's umbrella, but that is mostly hidden from me the consumer.
I can pay by credit card, bank transfer or debit card online, or I can hand over cash or swipe, tap or plug in my card to the mobile eftpos terminal when the goods arrive. For most things I can have delivery the same day if I order before about 2pm, and I can choose the delivery time between 9am and about 10pm. For the stuff that comes through specialty retailers, the day after the order is finalised is most common. For things where there are choices to be made, when the order is being put together someone calls my mobile and asks me questions to make sure I get exactly what I want.
For online payments, several banks now offer what is essentially a home eftpos terminal that you plug into your computer vis USB. You insert your chip card and type in a password rather than entering any card details into the computer.
When things are being delivered, I get an SMS as the delivery guy leaves the warehouse. I get his mobile phone number, so I can postpone delivery if for some reason I had to step out at the time I said I would be at home (or at the office.) He has my mobile, so he will call me if for some reason he doesn't find me.
I am predicting that in the near future there will be huge numbers of jobs going for e-bike delivery dudes. It will be the new burger-flipper job.
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