Clothing is the shining star as local shops snare a greater slice of the online dollar.

Changing Kiwi shopping habits are creating "unheard-of" growth in local online retail spending, an expert in small-to-medium businesses believes.

Jane Kennedy, NZ Post senior segment manager - SME says rises in the amount New Zealanders are spending online with local retailers across a number of sectors shows Kiwis are no longer afraid to shop this way.

She says figures from NZ Post's 2019 eCommerce report, The Full Download, show the clothing and footwear sector in particular is New Zealand's stand-out online performer.

In 2018 overall online spend in this category rose 28 per cent, but it is the spend on these items with local retailers that is raising eyebrows - it jumped by a staggering 45 per cent.

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"This is unheard of growth," says Kennedy. "Over 50 per cent of this is now domestic which completely flips the situation from 2017 when more than 50 per cent of it went offshore.

"Clothing and footwear is our shining star but there have been increases in online shopping in other sectors as well. New Zealanders are no longer afraid of buying online and I expect this trend to continue."

The Full Download, which was commissioned by NZ Post in partnership with Datamine using anonymised card transactions, shows overall online spending by Kiwis rose 16 per cent in 2018 and now represents 9 per cent of all retail spend. This, says Kennedy, is a growth rate any business would be happy with.

She says growth is evident in other sectors too: Online sales in homeware and electronic products grew 20 per cent in 2018 (domestic sales up 23 per cent), department and variety e purchases were up 10 per cent while spending on entertainment, books and stationary jumped 9 per cent.

Kiwis spent $736 million online on food and groceries in 2018, 90 per cent of which was with local merchants. This figure was 18 per cent more than in 2017 but it still represents, at 3 per cent, a small proportion of the total food and grocery shop.

The second smallest online sector is health and beauty. Online sales accounted for just 9 per cent of the total in 2018, although purchases with domestic retailers leapt by 30 per cent.

Kennedy says the "massive" increases in online for clothing and footwear will give people confidence to expand their shopping horizons to other retail categories as well.

She believes it is obvious from these figures that New Zealand retailers are doing something right: "I think Kiwi companies are now more conscious of international competition, are investing and doing a lot more to meet it – be it competitive pricing or the product range."

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Kennedy believes that although New Zealanders like to support Kiwi businesses, because they have had experience in the online space with big international players like Amazon, they expect local companies to step up and offer a good online experience as well.

"Having said this, the overall percentage of online spending in New Zealand retail is still very small, so there is huge potential for growth," she says.

The rise in sector spend reflects global shopping trends. Figures produced by NZ Post show clothing and footwear, for example, are the top commodities purchased in many countries including the UK, US, India, Japan and Australia.

One exception is China where although spend in the sector accounts for a healthy 25 per cent of all online spend, the biggest sector was health and beauty which represented 41 per cent of all online spend in 2018.

Kennedy thinks Buy Now Pay Later (BNPL) schemes have also played a major role in lifting domestic online spending (The Full Download shows 228,000 Kiwis have used these schemes which allow customers to spread payments weekly or fortnightly with no interest).

They have been especially popular with young females - 70 per cent of BNPL purchases are made by women - and have given online retailers a pathway to a new demographic and a much younger audience. But increasing demand for omni channel buying and the rise of social shopping are also playing a part.

Kennedy says demand for faster deliveries is also expected to increase: "Consumers, especially millennials, want immediacy and there is real pressure on retailers to offer overnight and even same day delivery."

According to The Full Download up to 1.8 million Kiwis purchased online in 2018 on average spending over $2000 each. Globally retail eCommerce sales hit $2.7 trillion in 2018, a figure expected to rise to $4.2 trillion by 2023.

NZ Post delivers more online shopping parcels than any other company in New Zealand, in November/December alone last year couriering 14.5 million parcels.
The report can be downloaded at: https://thefulldownload.co.nz/