Online sales stall stokes fresh retail fears

Australian shoppers took an unexpected, and for the moment unexplained, break from online shopping in February that has left economists scratching their heads and heightened concerns of a fresh slowdown for the retail sector.

Australian shoppers took an unexpected, and for the moment unexplained, break from online shopping in February that has left economists scratching their heads and heightened concerns of a fresh slowdown for the retail sector.

Usually a reliable engine of growth, online sales actually stumbled in the beginning of the year, with the nation's online retail spending rate growing at its weakest rate since May 2012.

Figures released yesterday by National Australia Bank show its Online Retail Sales Index was substantially weaker in February. Sales grew by 19 per cent year on year in the month to $13.1 billion, the weakest growth rate for nearly one year. Previously, NAB reported that online sales had grown 27 per cent to $13 billion for the year to January.

The NAB Online Retail Sales Index, now in its third year, declined in February - down to 193 points from 202 points in January.

"February was weak, we don't really know why," NAB chief economist Alan Oster said. "It's broad-based, it's everywhere, particularly in our biggest [segment] which is department stores and fashion, things like that. But every category that we have got went backwards in terms of us allowing for seasonality."

Other online segments with muted growth in February included online auctions, cosmetics and variety stores.

The ABS will release national retail sales figures for February on Thursday.

The dull growth for online sales in February was in contrast to trends in the past three years, where the NAB Online Retail Sales Index for February had been broadly in line with the level recorded in January.

January was a relatively strong month for online sales.

"Traditionally, February is in line with January, but this February it fell a lot. This is not seasonal; it could be just the consumer is saying, 'Hey I'm a bit scared and I don't necessarily need to buy these things'," Mr Oster said.

Department stores recorded the biggest fall in online sales growth. The fall comes as the nation's leading chains Myer and David Jones pour millions of dollars into their omni-channel online offering and IT infrastructure.

At David Jones' most recent earnings results, the upmarket fashion house said following the launch of its new webstore in November it had recorded a 288 per cent increase in sales for the second quarter of 2013.

Rival Myer recently reported that online sales were up 200 per cent in the first half.

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