The digital threat facing Australian bricks-and-mortar retailers, in one chart

  • Australian retail sales grew by just 2.1% in the year to January.
  • Within that increase, over half came entirely from sales at online retailers.
  • Online retail sales account for only 5% of total sales, but that figure is growing at over 30% per annum.

Australian retail sales have been pretty weak recently, even with an unusually large bounce in November last year.

According to the ABS, sales increased by just 2.1% in the year to January, continuing the deceleration seen in the past few years.

The chart below tells the story.

Sales are weak, especially given Australia’s population is increasing at around 1.6% per annum, sitting well below the levels seen in the past.

However, it’s not only the chart above that tells a story, but also the one below from Macquarie Bank.

Source: Macquarie Bank

It shows the annual growth in online retail sales, as measured by the ABS, along with the proportion of growth that online sales have made to spending over the past year.

“While domestic online sales account for 5% of total retail sales, according to the ABS, they are currently growing at 32% per annum,” Macquarie says.

“Domestic online sales currently account for more than half of total retail sales growth in Australia. A year ago the share was half that, and two years ago it was less than 10%.

“If you needed a statistic to summarise the disruption currently occurring in Australian retail, it is this.”

Given the increasingly digitalised world in which we live in, and the arrival of highly-aggressive online retailers such as Amazon, it’s little wonder why online sales are increasing rapidly both in dollar terms and market share.

It also raises some serious questions as to what the future holds for traditional bricks-and-mortar in Australia.

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