• The NAB Online Retail Sales Index continued to grow in August (4.2%), albeit slower than July, on a month-on-month, seasonally adjusted basis. Victoria again contributed heavily to the headline this month.
• In year-on-year terms, the growth in the NAB Online Retail Sales Index (+60.6% y/y) slowed a little from the record set in July.

• Results by category were mixed in month-on-month growth terms. Growth was led by larger sales categories, department stores, personal and recreational goods, and smaller sales category, games and toys. Second largest category, grocery and liquor, has now recorded continuous growth for the past 14 months, while largest sales category, homewares and appliances was flat in the month. The result for this category was saved from contraction by a strong growth in Victoria, and to a lesser extent, NT. At the other end of the scale, media contracted, and is by far the slowest in year-on-year terms.
• In month-on-month terms, Victoria again led growth, with the result well above the other states. NSW, SA and ACT also recorded growth, albeit far more moderate. Of the larger sales states, Queensland and WA recorded a contraction. NT, and Tas. also contracted in the month, with the latter recording four consecutive months of contraction. In year-on-year terms, all states recorded double digit growth, with Vic. leading overall, now more than double what it was in the same month 2019.
• Sales in metro areas recorded growth, albeit slowing, in August, while regional areas contracted slightly. Both metro and regional Victorian areas recorded particularly strong growth. In all areas, regional growth was slower or the contraction worse than metro areas, with Tasmania and WA regional particularly weak. In year-on-year terms, metro Victoria recorded the highest growth, over double what online sales were for the same month 2019.
• Monthly growth was recorded for both domestic and international merchants, with international online retailers outpacing domestic. The international result was driven by strong results in the homewares and appliances, and media categories.
• We estimate that in the 12 months to August, Australians spent $39.2 billion on online retail, a level that is around 11.5% of the total retail trade estimate (Preliminary August 2020, Series 8501, Australian Bureau of Statistics), and about 33.6% higher than the 12 months to August 2019.

NAB Chief Economist, Alan Oster commented:

Our NAB Online Retail Sales Index continued to grow in August, again supported by the exceptionally strong monthly growth in Victoria. This data incorporates a full month of stage 4 restrictions in metropolitan Melbourne. Below, in the heatmap section, we take a look at the change in the department store category for Victoria, which was a key driver of growth in that state this month.

Department stores led growth in the month, with exceptionally high growth in Victoria and strong growth in ACT, SA and NSW. Grocery and liquor has now recorded 14 months of continuous growth, although the state results for this category are far more mixed. Vic, NSW and SA contributed to growth in the third fastest category, personal and recreational goods, with all other states contracting. Growth for the largest sales category, homewares and appliances, was flat in the month, with only Vic and NT recording growth. At the other end of the scale, media contracted in all states and territories in the month. In year-on-year terms, however, this category is currently the 4^th fastest and has contributed strongly to the headline.

The three most populous states represent just over 80% of all online sales, slightly above their share of the population. Of these three states, Victoria recorded the strongest growth in the month, well above growth in the other states. The lock-down is clearly impacting the result as businesses adapt, with contactless pickup and discounted or free delivery. In year-on-year terms, online sales in Victoria are more than double what they were in the same month 2019. This is well beyond any Christmas period trading that we have observed for Vic online retail in both growth and absolute dollar terms. The state also led growth in each category, except media, and takeaway food in the month.

Despite slowing, metro areas continued to grow, while regional areas contracted in the month. The regional result was saved from further weakness by Victoria, with all other key regional areas contracting in the month. In year-on-year terms, Victoria leads in both metro and regional sales growth, with metro (+126%) more than double what it was in August 2019, and regional also up strongly (+73.8%). Although NSW recorded growth in the month, this was all due to Metro areas, with regional areas contracting.

In terms of merchant location, sales for domestic merchants slowed from strong growth in the month prior, while sales growth for international continued to rebound from the contraction in June. In year-on-year terms, domestic merchants have significantly outpaced international.

For further details, please see the NAB Online Retail Sales Index August 2020.