Australia Post published its latest online shopping report on Tuesday, showing that end of financial year sales were a focus for shoppers in June, preventing a decline in online growth.
Online spending crept up 1.1 per cent annually in the June quarter, well behind the inflation rate, while basket size in discretionary categories like beauty, hobbies and recreation fell 2.6 per cent.
Cost-of-living pressures are clearly pushing shoppers into more discerning choices, with a 19.1 per cent spike in fashion and apparel sales being tied to a boost in affordable clothing.
“While Aussies are looking to stay on trend, they are also looking to stay on budget, with affordable fashion driving sales,” Australia Post’s parcel, post and e-commerce general manager Gary Starr said.
“Household spending data shows that Australians are being careful with how they spend their money, and we’re seeing online shopping help them manage costs and shop strategically for affordable items.”
Retailers discounting as sales slow
The data is the latest in a growing pile of evidence that the consumer sector is in a broad retreat heading into the second half of 2024 amid the cost-of-living crisis and high interest rates.
Household spending continues to grow, but it is tracking well behind inflation on most measures, implying that the average family budget isn’t stretching as far as it used to.
Retailers in categories most exposed to the shopping slowdown have responded by dropping prices and discounting heavily, with the end-of-financial-year sales proving pivotal this year.
Online spending between June 17 and June 30 was 4.4 per cent higher than last year, Australia Post said.
While South Australia saw a 2.3 per cent rise, the strongest quarterly growth came from Tasmania (up 8.1 per cent), the Northern Territory (6.7 per cent) and Queensland (5 per cent).
However, across Australia’s two largest states the online shopping picture was more bleak; spending in Victoria fell 1 per cent annually, while New South Wales was down 0.3 per cent.
“Retailers should note that while overall spending may be down, there are still plenty of opportunities to connect with their customers online – particularly during sales periods,” Starr said.
Retailers lean into AI
Retailers are also getting more creative with their business models to entice customers to spend, with Australia Post also revealing that four in 10 e-commerce companies are now using artificial intelligence in their businesses.
The most common applications are customer service, inventory management, content creation and even fraud detection, suggesting businesses are finding broad use for the technology.
Fashion website The Iconic, for example, is using AI to improve the search tool on its platform, making it easier for customers to find clothes with general queries like “beach party”.
AI is also talking to customers through the company’s website, and is even quicker than human staff were able to respond previously.
– TND