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Surge in retail spending online in September in dramatic contrast to previous trends; use of online buying by over 65 yr olds growing fastest

Business
Surge in retail spending online in September in dramatic contrast to previous trends; use of online buying by over 65 yr olds growing fastest

New Zealand’s total online spending was very strong in September, with spending up 13% on September last year. Previously the annual growth rate had been running at only about half that rate.

Both domestic and international retailers benefited from the lift in spending.

Online purchases at domestic merchants were up 9% on last September, and online purchases at offshore merchants were up 20%.

Stand out major categories this month were Electrical and Electronic goods, Computers and Peripherals, and Other Specialised Food. Spending in each of these categories was up by more than 20% on September 2013.

Domestic clicks outpace domestic bricks. Combined physical store and online spending at local retailers in September was up a respectable 5% on September last year.

Notably, the growth in spending at physical stores was clearly outpaced by the 9% annual growth in online spending at local merchants (11% if we if we exclude the specialist “Daily Sales” sector).

Exchange rate effects

The NZ dollar has weakened in recent months, including a 6% fall against the USD between July and September.

This makes international goods more expensive in NZD terms. However, the solid rise in online spending at offshore retailers in September suggests that, for now at least, kiwis are not being discouraged by the extra cost.

Interestingly, the NZD-USD exchange rate in September this year is almost the same as it was in September 2013. So the 20% annual growth in purchases at overseas sites is comparing two periods with a similar level for this key exchange rate.

Who is spending online?

The following is analysis from Marketview, the data supplier behind this research.

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From the data we analyse we have seen an increase in spending across all age groups, and across most demographic segments in the NZ market.

To illustrate an aspect of this we have compiled the accompanying breakdown by age bands.

The charts show the distribution of spending by location of merchant (local in light blue, overseas in dark blue). The inner circle shows the spending distribution 5 years ago (October 2008 – September 2009). The outer circle shows the latest 12 months (October 2013 – September 2014). The percentage change in the value of spending by each age group, between the two periods, is shown in the tables to the right. Again this has been split by online-merchant location.

With the exception of the youngest age groups, which tend to be focused on day-to-day ‘experiential’ living, we have seen online spending at least double in the last five years, with the strongest growth rates coming from the older consumers spending on international sites.

While this growth is coming off a small base, it is a timely reminder that online spending is not just for the Fendalton ‘fashionista’ wanting the latest trend.

We are seeing all age groups significantly increase the value of their online spending and most age groups increasing the proportion of goods they buy from offshore sites.

The softening exchange rate does not appear to be a deterrent to buying offshore, at least for now.

If your grandmother is happy buying her Royal baby celebratory tea towels online you can be reasonably certain that online spending is more than just a niche competitor to local retail, it’s a key part of most consumers’ decision set.

Online retail sales

Select chart tabs

Source: BNZ

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