• Growth contracted again for the NAB Online Retail Sales Index in April (-3.7%), following on from a revised contraction in March (-1.0%, previously -0.5%), on a month-on-month, seasonally adjusted basis.
• In year-on-year terms, the growth in the NAB Online Retail Sales Index slowed considerably (1.4% y/y). The base effects from the high sales growth period of 2020 are now evident in the year-on-year comparisons. Per last month, we expect the moderating influence that this has had on growth rates to continue. 

• General contraction by category in month on month terms, with the exception of takeaway food and media. The largest sales category, homewares and appliances recorded the largest contraction in the month, and has now contracted for the past three months. In contrast, smaller sales categories media, and takeaway food, have recorded two consecutive months of growth, and the latter category leads in year-on-year terms.
• In month-on-month terms, after leading growth a month prior, TAS contracted sharply in April. Of the large sales states, VIC recorded the largest contraction in monthly sales growth, while WA was the most mild. In VIC, there was a larger fall relative to other states in department stores, while for TAS it was a drop in homewares and appliances. While TAS also leads the fall in year-on-year growth terms, a bigger contribution was from large sales state NSW, which also contracted. With VIC now slowing by this metric, WA leads, albeit this comparison is made to a period in 2020 of rapid growth for VIC.
• The monthly contraction in online sales was slightly higher in Metro areas, with QLD a key driver. The headline contraction for TAS and VIC was more pronounced in regional areas this month. In year-on-year terms, metro WA, and QLD regional now outpace other areas.
• Sales growth for both domestic and international merchants contracted in month-on-month terms. Sales growth for domestic merchants recorded a larger contraction in the month in all categories, except takeaway food.

• We estimate that in the 12 months to April, Australians spent $46.7 billion on online retail, a level that is around 12.9% of the total retail trade estimate (Preliminary April 2021, Series 8501, Australian Bureau of Statistics), and about 39.6% higher than the 12 months to April 2020.

NAB Chief Economist, Alan Oster commented:

In month-on-month terms, our NAB Online Retail Sales Index contracted again in April, after a revised contraction in March. When comparing this April to 2020, i.e. in year-on-year terms, growth has now slowed considerably. As mentioned last month, part of this slowdown in year-on-year growth is a result of the base effects of the initial online spike in 2020. At that time, online growth accelerated to +60.9%(y/y), with double digit growth only ceasing now. An element of perspective is advised when interpreting the year-on year results over the next few months.

The contraction in sales this month was driven by another drop in the largest sales category, homewares and appliances in all states except WA and ACT. There was also a drop for other key sales categories, fashion, and personal and recreational goods, which weighed heavily on the overall result. In year-on-year terms, the personal and recreational goods category contracted heavily. However, base effects are playing a part here, as this is a comparison to a period where the category recorded strong growth.  There was general alignment between most overall category results and state category result this month, with some minor exceptions such as growth for WA grocery and liquor, or the contraction in media spend for VIC and NT.

In year-on-year terms, growth for metro and regional areas has somewhat converged, but, split by state, there remain some large differences. Most of the contraction in NSW appears primarily from regional areas, which also detracted from growth in VIC. However, for QLD, it was regional areas that outpaced metro.

In month-on-month growth terms, while both domestic and international sales contracted, this months result was more heavily weighted towards domestic retailers. Categories like homewares and appliances, that are predominantly domestic, contracted for both, as did fashion, which has a larger international presence. The game and toy, and personal and recreational goods, categories looked to be similarly affected, regardless of merchant location in April. Over the past year, growth had been driven overwhelmingly by domestic online retailers, but international retailers, which did not grow as strongly in 2020, are beginning to outpace domestic.

For further details, please see the NAB Online Retail Sales Index April 2021