Young woman shopping with credit card and laptop computer

Online retailing continues to grow as consumers opt for services that provide greater convenience with reduced access to bricks-and-mortar stores during COVID-19 accelerating the shift towards online.

Figures from the Deloitte Access Economics Q2 2020 Retail Forecasts Report showed online retail turnover as a percentage of total Australian retail turnover has been trending upwards, rising from 5.7% in March 2019 to 6.6% in February 2020. As a percentage of total Australian retail turnover, online retail rose to 7.1% in March 2020, before climbing steeply to 10.0% by April. Within two months, online retail had captured an additional 4.3% of retail market share. This growth was partly driven by purchases associated with major events such as Easter and Mother’s Day.

However, the rate of online sales growth experienced during COVID-19 is not expected to continue, according to Deloitte partner, David Rumbens. “People like browsing and shopping, and once restrictions ease and health concerns are alleviated, consumers are expected to mostly return to bricks-and-mortar stores.

“COVID-19 will have convinced parts of the population that online purchases and delivery services are a viable option and at times, more efficient, accelerating the longer-term trend already seen towards online shopping,” he said.

Department store spending is expected to suffer from reduced employment, confidence and wealth and slower population growth with overall sales expected to fall 5.2% in 2020, according to the report.

Department store spending began to recover in May with credit card research in the week ending  May 24 showing department store spending per person was 36% higher than in an average week,  likely buoyed by fiscal stimulus and early access to superannuation.

Spending on household goods offered another positive retail news story in the March quarter with sales up 2.2% as the sudden shift to working from home sparked demand for electronics and home office equipment. As a result, revenue climbed 9.1% between February and March, moving in the opposite direction to apparel and department stores.

Delving deeper into revenue growth between February and March showed an 11.3% increase in electrical and electronic goods retailing. Conversely, furniture, floor coverings, houseware and textiles fell 5.6%.

In future months, household goods spending is likely to wane once people return to other activities and the effect of irregular home improvements and one-off purchases subsides.

The usual economic drivers of household goods spending, including property market activity, alongside take-home income and consumer confidence are expected to remain weak, leading to an expected 6.1% increase in household sales over the June quarter before a 5.8% decline in September.

In general, there is a clear linkage between low levels of anxiety and a better retail performance. This highlights the need to continue to monitor confidence measures as a source of insight into future spending trends.