1

NAB Online Retail Sales Index
Indepth report – October 2012
nAustralia’s online retail sales are continuing to climb, up
to A$12.3 billion in the year ended October 2012, but for
now the share of total spending is still modest, at around
5.6%. The rate of growth in online sales has strengthened
considerably over the last six months, following something
of a slowdown in the early part of 2012, with growth of
around 26% year-on-year in October, compared with 2.2%
for traditional retailing in September.
Domestic retailers have driven the growth in online sales
over recent months, with international retailers lagging a
little behind. Domestic retailers have been the dominant
players in the online space, accounting for almost three-
quarters of sales in the year to October.
Those aged in their 30s and 40s remain the key demographic
for online spending, with the under 30s age group lagging
on a per capita basis – although they do record marginally
faster growth rates than any other age group.
The strongest spending patterns are in the Australian Capital
Territory, the Northern Territory and Western Australia, with
the latter outperforming the bulk of the country in growth –
at 36% year-on-year in October.
This is just a snapshot of the wealth of information
contained in the NAB Online Retail Sales Index. Enjoy the
rest of the report.
– Alan Oster, Group Chief Economist, NAB
nWhat is of primary interest in our latest NAB Online
Retail Sales Index is the growth our domestic retailers have
experienced compared to their international counterparts.
We’re seeing strong online growth from local retailers
as online becomes an integral sales and distribution
channel. In part, this can be attributed to retail businesses
understanding their customers’ channel preferences and
responding accordingly by providing their customers with
choice in how they engage and make their purchases.
The opportunities and challenges faced by our retail clients,
both domestic and international, online and traditional,
high street versus shopping centres, has a direct fow-on
efect and implications for other sectors from transport,
logistics and property. Many of our clients in these sectors
have drawn upon the insights in this Index as they adapt
their business models to the ever-changing landscape
of Australia’s retail sector – investment, innovation and
adaptability are all crucial ingredients for success.
– Tiernan White, Retail Sector Head & Head of NAB
Corporate (NSW)
© 2012 National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686
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Retail sales (ex. takeaway food) Online Index
Chart 1: Growth in online sales vs. retail
sales (%, yoy)
Jan- Jul- Jan- Jul-







Chart 2: Growth in online sales by retail
location (%, yoy)
Jan- Jul- Jan- Jul-
International Domestic
Table 1. Key online retail statistics
Index points yoy growth (%)
Aug
12
Sep
12
Oct
12
Aug
12
Sep
12
Oct
12
Online
Index
210.1 200.4 208.7 21.7 23.4 26.4
Domestic
sales
201.3 192.3 202.0 22.2 24.9 28.0
International
sales
238.1 226.4 230.2 19.9 19.1 21.9
All data is non-seasonally adjusted (nsa). Online sales data is produced by Quantium.
Traditional retail sales data is sourced from the Australian Bureau of Statistics (ABS).
2
22% 26%
CrowLh ín LradíLíonal
reLaíl sales (SepLenber)
At a glance
Domestic vs international (nsa, OcLober yoy) Traditional vs online (nsa, OcLober yoy)
CrowLh ín onlíne
reLaíl sales
2.2%
CrowLh ín donesLíc
onlíne reLaíl sales
CrowLh ín ínLernaLíonal
onlíne reLaíl sales
5.6%
DonesLíc onlíne reLaílers accounLed
lor around ¯4% ol LoLal onlíne sales
Onlíne purchases híL AS12._bn or
_.6% ol Lhe síze ol LradíLíonal reLaílíng
74%
28%
Share of spending by state
Share ol spend (%)
N1
1.2
%
QLD
18.8
%
SA
6.)
%
Per capíLa (¦ndex)
NSW VIC QLD WA SA 1AS AC1 N1
1¶).¶
10¶.8
¶¶.)
126
11¶.¶
¶¶.¶
¶¶.¶ ¶0.)
100
WA
11.8
%
AC1
2.2
%
1AS
2.¶
%
NSW
¶¶.6
%
VIC
2¶.q
%
WA AusLralía excl. WA
Focus on WA CrowLh ol spend (% yoy)
Crowth of spending by region
¶0s q0s ¶0s 60+ <¶0
2).6
2¶.¶
¶¶.q
1).1
¶1.¶
1¶.¶
¶2.8
1).¶
¶0.¶
20.6
Average annuaI growth rate by age group
WA – regíonal purchases

%

%

%
AusLralía – regíonal purchases
AusLralía – neLropolíLan purchases
NO1L. 1O1ALS MAY NO1 SÜMÜP 1O1oo%DÜL 1OkOÜND¦NC
Share of total online spend by sector and age group
Share ol spend (%)
60+
Sector 1: Onlíne AucLíons,
DeparLnenL SLores, ¦ashíon,
CosneLícs, VaríeLy SLores
Sector 2: Hone, ¦urníLure,
Applíances, LlecLronícs
Sector 3: kecreaLíon, 1oys, Canes
& Hobbíes, Musíc, Movíes, 8ooks
Sector 4: Croceríes, Líquor,
Specíalísed ¦ood
48
%
__
%
48
%

%

%
4o
%
21
%
1_
%
2_
%
21
%

%
1_
%
2o
%

%
14
%

%
21
%
1_
%
1_
%

%
_
%

%
21
%
1_
%
AII
ages
<¶0
¶0s
q0s
¶0s
NAB Online Retail Sales Index
3
Online Retail Sales Index
continues to trend higher
The NAB Online Retail Sales Index has continued
to trend upwards in recent months, to 209 points
in October 2012 (chart 3).
During the 12 months to October 2012, Australia’s
online retail spending totalled around A$12.3 billion.
When compared with traditional bricks & mortar
retail sales, the level of online spending remains
quite modest. For the year to September 2012,
traditional retail sales* totalled A$221 billion –
indicating that online sales are equivalent to
around 5.6% of the traditional sector.
As detailed on page 4, the composition of
traditional and online retail sales difers notably.
When food & beverages are excluded from both
series, online retail sales increases to almost 9.1%
of total non-food spending (up from 8.7% in July).
Online sales record a pickup
in growth rates – up 26% yoy
in October
The rate of growth in online sales has strengthened
considerably over the last six months, following a
slowdown in the early part of 2012.
In October, online retail sales grew by around 26%
year-on-year, compared with the low point of just
14% year-on-year in May (chart 4).
Growth rates for the traditional retail sector are
far more modest – coming of a considerably larger
base – with an increase of 2.2% year-on-year in
September (on a non-seasonally adjusted basis).
When seasonal factors are included, growth rates
for the traditional sector have eased slightly in
recent months, back to around 3% year-on-year
in October.
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ABS retail sales (ex. takeaway food) Online Index
Chart 3: Online index vs. retail sales
(nsa, monthly)
Jan- Jul- Jan- Jul- Jan- Jul-






Retail sales (ex. takeaway food) Online Index
Chart 4: Growth in online sales vs. retail
sales (%, yoy)
Jan- Jul- Jan- Jul-







Chart 5: Growth in online sales by retail
location (%, yoy)
Jan- Jul- Jan- Jul-
International Domestic
Indepth report – October 2012
* Traditional retail sales exclude cafés, restaurants and takeaway food to create a
like-for-like comparison.
4
Domestic retailers driving
growth, with international
marginally softer
Recent months have seen a steady increase in the
growth rates for domestic sales, while international
online retail sales have lagged marginally. This is in
contrast to the period between November 2011 and
July 2012, when there was a close relationship between
the two series (chart 5).
Domestic sales increased by 28% year-on-year in
October 2012, while international sales increased
by 22% year-on-year.
As we have previously noted, the large divergence
in growth rates in the frst half of 2011 was related
to a one-of surge in international sales in late 2010.
International index more volatile in
2012, and a little softer since August
The international index has been far more volatile over
the last six months – refecting the relatively subdued
growth rates for most of this period (compared with
domestic), along with the spike in growth in July.
Since August, the trend for international sales has been
comparatively softer. The international index was at 230
points in October, compared with 202 points for the
domestic sales index (chart 6).
Domestic retailers continue to
control the majority of sales
Domestic retailers – defned in our index as those that
are Australian for tax purposes – control the majority
of online retail sales in Australia. From late 2010, the
share of domestic sales has trended around 73%,
refecting the similar trends in growth rates for both
series (chart 7). In recent months, it has edged slightly
higher – to 74%.
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International Domestic
Chart 6: Online index by retail location
(nsa, monthly)
Jan- Jul- Jan- Jul- Jan- Jul-
o.8o
o.¯_
o.¯o
o.6_
o.6o
o.4o
o.__
o._o
o.2_
o.2o
Chart 7: Share of online sales by retail
location (nsa, nonLhly)
¦nLernaLíonal (kHS) DonesLíc (LHS)
!an1o !ul1o !an11 !ul11 !an12 !ul12






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
Sector  Sector  Sector  Sector 
Chart 8: Online index by category
(nsa, monthly)
Jan- Jul- Jan- Jul- Jan- Jul-
NAB Online Retail Sales Index
“Traditional toy sale peaks for
discount department stores are now
mirrored in their online trade.”
Tony Davis, Quantium
5
Growth in Toys & Media has slowed
signifcantly, while Household
Goods & Electronics lags
Share of total spend in 12 months to October 2012
48
%

Sector 1. Online Auctions, Department
Stores, Fashion, Cosmetics, Variety Stores.
19
%

Sector 2. Home, Furniture, Appliances,
Electronics.
21
%

Sector 3. Recreation, Toys, Games &
Hobbies, Music, Movies, Books.
13
%

Sector 4. Groceries, Liquor &
Specialised Food.
We continue to observe some divergent trends between
the individual categories of online sales (chart 8).
Growth rates for Sectors 1 (Auctions, Department Stores
& Fashion), 3 (Toys & Media) and 4 (Food & Beverages)
have exhibited relatively low levels of volatility over the
last year – ranging between 15% and 35% year-on-year.
In contrast, Sector 2 (Household Goods & Electronics)
has been far more volatile – with this sector recording
year-on-year declines in individual months over the past
year (chart 9).
Compared with somewhat divergent trends in 2011,
there has been a convergence in the growth rates for
Sectors 1, 3 and 4, with Sector 3 recording the most
signifcant slow down. For the frst half of 2011, this
sector recorded the strongest rates of growth, before
slowing sharply in October 2011.
By age group, there remain some notable diferences
in spending by category – with the under 30s having
a larger than average share of spending in Sectors 1
and 3, while being notably below average in Sector 4.
The profles for those aged in their 30s, 40s and 50s
are closer to the national average, while those aged 60
and over have a larger than average spend in Sector 4
(infographic page 2).
Indepth report – October 2012
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-
Chart 9: Online index growth by category
(%, yoy)
Sector  Sector  Sector  Sector 
Jan- Jul- Jan- Jul-
Under 30 consists of ages 18 to 30.

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
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
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Share of spend (%) Per capita (index)
Chart 10: Share of spending by age group
(year to October )
Under  consists of ages  to .
Under

s s s + Under

s s s +




Chart 11: Growth of spending by age group
(%, yoy)
Under  s s s +
Jan- Jul- Jan- Jul-
Note: Totals may not sum to 100% due to rounding
6
Per capita spending remains
dominated by the 30s and 40s
The share of spending by age group has
remained quite stable since we commenced tracking
online retail sales. In an absolute sense, those in their
40s and younger account for the majority of sales – at
around 23% for each group in the year to October
2012 (chart 10). However, on a per capita basis, the
bulk of spending is recorded among those in their 30s
and 40s – with the under 30s age group recording
below average spending – likely a refection of their
relative lack of purchasing power.
Compared with some notable divergence in growth
rates in 2011, trends in growth rates by age group have
been much more uniform over the last year – although
the under 30s have recorded marginally stronger
growth rates than other age groups for much of this
time (chart 11).
Per capita spending strongest
in the ACT, NT and WA
At a state level, online spending is dominated by the
largest states – with New South Wales (NSW), Victoria
(VIC) and Queensland (QLD) accounting for 76% of
total online retail spending (chart 12). However, on
a per capita basis, the ACT has the strongest level of
spending, followed by the Northern Territory (NT) and
Western Australia (WA).
Growth trends for NSW, VIC, South Australia (SA) and
the ACT have been relatively uniform in 2012 – and
in line with the national average (chart 13). Generally,
growth has been marginally stronger in QLD and also
stronger than average in the NT – although these
rates have been highly volatile, due in part to the
small population. In terms of growth, WA continues to
outperform the bulk of the country – at 36% year-on-
year in October.
NAB Online Retail Sales Index
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Share of spend (%) Per capita (index)
Chart 12: Share of spending by state
(year to October )
N
S
W
V
I
C
Q
L
D
W
A
S
A
T
A
S
A
C
T
N
T
N
S
W
V
I
C
Q
L
D
W
A
S
A
T
A
S
A
C
T
N
T
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

Chart 13: Growth of spending by state
(%, yoy)
WA NT QLD SA
Nov- Apr- Sep-
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


Chart 13B: Growth of spending by state
(%, yoy)
VIC NSW TAS ACT
Nov- Apr- Sep-
“The Group Buying sector of online
continues to see rapid decline, but
we are bound to see other new
online formats emerge in 2012.”
Tony Davis, Quantium
7
Regional Western Australia
strongly above average in per
capita spending
Regional Australia continues to record stronger
growth rates for online spending than its
metropolitan peers – resulting in a gradually
diminishing distinction between the two groups on
a per capita basis (chart 14). Metropolitan residents
account for the majority of total spending – 71% in
the year to October 2012 – but the per capita share
for this period dipped to 102.3 points (compared
with 102.5 points in July).
Trends in the metropolitan/regional split remain
divergent around the country – with the spending
of regional WA continuing to increase – up to 126
points (previously 123) – and regional spending
outpacing metropolitan WA.
In October 2012, regional sales increased by 30%
year-on-year, compared with 25% year-on-year for
metropolitan sales. Growth rates were higher in
regional WA – at around 45% year-on-year (chart 15).
Trends for the under 30s softer
in WA – likely lacking mining
revenue
While growth in WA online spending has been
considerably stronger than the national average,
there have been notable divergences by age group
(chart 16).
Among the under 30s, there is relatively little
distinction in the year-on-year growth rates over
the last year between WA and the rest of the
country. Under 30s in WA recorded average growth
rates of 28% over the last year, against 23% for
Australia excluding WA. On average, under 30s
in WA are less likely to beneft from high mining
incomes – either lacking the qualifcations or
experience of older age groups.
Growth rates diverge with the other age groups, as
the under 30s has the lowest growth rate in WA, but
the highest overall for the rest of Australia. n

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Regional (per capita) Metro (per capita)
Chart 14: Share of spending by region
(year to October )
WA NSW* AUS VIC QLD Other

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


Metro Regional
Chart 15: Growth of spending by region
(%, yoy)
Jan- Jul- Jan- Jul-





Australia excl. WA Western Australia
Chart 16: Average annual growth rate by
age group (% yoy)
< s s s +
Indepth report – October 2012
*Note: Metropolitan NSW includes the ACT in this series.
Important notice.
DISCLAIMER: While care has been taken in preparing this material,] National Australia Bank Limited (ABN 12 004 044 937) does not warrant or represent that
the information, recommendations, opinions or conclusions contained in this document (“Information”) are accurate, reliable, complete or current. The
Information has been prepared for dissemination to professional investors for information purposes only and any statements as to past performance do not
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Promotion) Order 2001) and should not be passed to any other person who would be defned as a private customer by the rules of the Financial Services
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U.S DISCLAIMER: This information has been prepared by National Australia Bank Limited or one of its afliates or subsidiaries (“NAB”). If it is distributed in
the United States, such distribution is by nabSecurities, LLC which accepts responsibility for its contents. Any U.S. person receiving this information wishes
further information or desires to efect transactions in any securities described herein should call or write to nabSecurities, LLC, 28th Floor, 245 Park Avenue,
New York, NY 10167 (or call (877) 377-5480). The information contained herein has been obtained from, and any opinions herein are based upon, sources
believed to be reliable and no guarantees, representations or warranties are made as to its accuracy, completeness or suitability for any purpose. Any opinions
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any other action. It is intended for the information of clients only and is not for publication in the press or elsewhere.
© 2012 National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686
Alan Oster
Group Chief Economist
National Australia Bank
+61 (0) 3 8634 2927
Alan.Oster@nab.com.au
Tiernan White
Retail Sector Head & Head of
NAB Corporate NSW/ACT
+61 (0) 2 9237 1041
Tiernan.White@nab.com.au
Tony Davis
Director
Quantium
+61 (0) 2 9292 6400
Tony.Davis@quantium.com.au
To discuss this report in more detail please speak with your
NAB Relationship Manager, visit nab.com.au/onlineretailsales or contact:
About Quantium
Quantium is Australia’s leading data analytics and marketing strategy frm. Quantium has worked
with NAB for more than 4 years, assessing de-identifed transaction data to derive insights, trends and
shopping habits of diferent customer groups. The resulting analysis forms Market Blueprint and is
used by NAB and other businesses to drive innovation and business performance through customer,
distribution and marketing strategies. www.quantium.com.au

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