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Overseas online shopping lures Aussies
By Elaine Lies |
November 25, 2010, Thursday
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Print Edition
Print Edition
GIVEN the strong Australian dollar, it is likely to be the season for shopping online and internationally for many Australians, making things less bright for domestic retailers, according to a report.
And even with the economy doing well, recent interest rate rises may cap Christmas spending for many households are suffering under heavy mortgages, with spending likely to roughly equal last year's, according to business information analysts IBISWorld.
"You might have expected more growth because Australia weathered the financial crisis well and because the economy is strong and unemployment low," said Sam Ellis, senior industry analyst at IBISWorld Australia.
"But what's hanging over a lot of households is recent interest rate rises. Housing tends to be highly leveraged here and there's a lot of mortgage."
Australia's central bank surprised markets early this month by lifting the key cash rate to a two-year high of 4.75 percent. It has led the developed countries in raising 175 basis points since October 2009.
The Australian dollar recently surged to parity with the US dollar, which will prompt many shoppers to turn their eyes overseas. The Australian dollar was hovering around 98 US cents yesterday in Asian trading.
"Obviously that's the main factor - the strength of the Australian dollar, particularly against the US dollar, which is probably where a lot of our overseas online shopping tends to come from," Ellis said.
"Obviously as the years go by, the number of people who are tech savvy and Internet savvy and comfortable transacting over the Internet increases, so that's the other longer-term trend driving people to shop online and internationally as well."
This trend is likely to especially hurt retailers of small luxury and personal items such as fragrances, cosmetics and accessories, which are easy to send, IBISWorld said in a statement.
Recent surveys indicate most Australians plan to spend about the same this year as they did last year on Christmas gifts, with spending up only 2.5 percent. Overall, total December retail spending is likely at A$27.7 billion (US$26.9 billion).
And even with the economy doing well, recent interest rate rises may cap Christmas spending for many households are suffering under heavy mortgages, with spending likely to roughly equal last year's, according to business information analysts IBISWorld.
"You might have expected more growth because Australia weathered the financial crisis well and because the economy is strong and unemployment low," said Sam Ellis, senior industry analyst at IBISWorld Australia.
"But what's hanging over a lot of households is recent interest rate rises. Housing tends to be highly leveraged here and there's a lot of mortgage."
Australia's central bank surprised markets early this month by lifting the key cash rate to a two-year high of 4.75 percent. It has led the developed countries in raising 175 basis points since October 2009.
The Australian dollar recently surged to parity with the US dollar, which will prompt many shoppers to turn their eyes overseas. The Australian dollar was hovering around 98 US cents yesterday in Asian trading.
"Obviously that's the main factor - the strength of the Australian dollar, particularly against the US dollar, which is probably where a lot of our overseas online shopping tends to come from," Ellis said.
"Obviously as the years go by, the number of people who are tech savvy and Internet savvy and comfortable transacting over the Internet increases, so that's the other longer-term trend driving people to shop online and internationally as well."
This trend is likely to especially hurt retailers of small luxury and personal items such as fragrances, cosmetics and accessories, which are easy to send, IBISWorld said in a statement.
Recent surveys indicate most Australians plan to spend about the same this year as they did last year on Christmas gifts, with spending up only 2.5 percent. Overall, total December retail spending is likely at A$27.7 billion (US$26.9 billion).
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