• On a month-on-month, seasonally adjusted basis, the contraction in growth for the NAB Online Retail Sales Index accelerated in August (-3.5%), continuing the recent trend (July revised -1.6%, previously -1.4%).
• In year-on-year terms, the NAB Online Retail Sales Index recorded another large contraction in August (-18.9% y/y). It is worth noting that this is compared to a period of exceptionally strong growth in August 2021.
• Sales contracted across all categories in the month, led by the largest sales category, homewares and appliances, which dropped at a rate much steeper than the overall. Department stores which defied the month-on-month headline contraction in July, was the second worst performing in August. In year-on-year terms, takeaway food, and media, continue to grow.
• The state result was again mixed in the month, with TAS rebounding after last month’s drop, along with more moderate growth for NT, WA, and SA. This was outweighed by a contraction in the big three sales states NSW, VIC, and QLD. In year-on-year terms, the larger contraction in NSW, VIC, and ACT outweighed growth in WA, SA, TAS and NT. Again, some perspective is warranted here, with the comparison made to a period in 2021 of exceptionally high growth.
• After recording growth in July, regional areas caught up with their metro peers in August, with rates of contraction now similar. Vic metro and NSW regional areas played a significant part in the monthly result. In year-on-year terms, overall growth in both metro and regional areas contracted, albeit, for regional, at about half the rate of metro areas. This was again mostly due to VIC, NSW, and metro QLD.
• The contraction in monthly growth was attributed to both domestic and international retailers, with the former faring far worse. This was particularly the case for homewares and appliances, department stores, and games and toys. Fashion, and media however, did fare better for domestic retailers in the month. Over the year, domestic retailers recorded a contraction more than double the rate of international, but again, this is partly reflecting the considerable base growth a year prior for domestic retailers.
• NAB estimates that in the 12 months to August, Australians spent $54.9 billion on online retail, a level that is around 14.0% of the total retail trade estimate (July 2022, Series 8501, Australian Bureau of Statistics), and about 9.4% higher than the 12 months to August 2021.

NAB Chief Economist, Alan Oster commented:

In month-on-month terms, our NAB Online Retail Sales Index has contracted for a seventh straight month, and apart from the Omicron induced spike in January, the monthly change has been negative since October. These rolling monthly contractions have well and truly caught up with the year-on-year metric. But, as mentioned in July, it is worth keeping this in context. Most states during the September quarter 2021 experienced some form of lockdown.

Online sales growth in August 2021 remained elevated, boosted particularly by NSW, and VIC. To give further perspective, if we compare the current headline total, to that of the same month pre-covid (i.e. August 2022 vs August 2019), total online spend is up about 75%. This compares favourably to broader retail sales (up 26% on July 2019), indicating that while there has been weakness in year-on-year terms, the broader long-term strength of online retail remains intact. Indeed, in twelve-months-to terms, growth remains positive (9.4%). However, as much of this came from growth during the lockdown period in the third, and early fourth, quarters of 2021, we see a continuation of this moderation if the current monthly results continue.

Three clear standout categories over the past year, in terms of contribution to growth (through the year terms), have been department stores, grocery and liquor, and takeaway food. With average higher growth over the period, each of these has gained share in the index. That is, these three, that now make up about 40% share of the index, contributed just over 70% to growth over the past 12 months. In contrast, homewares and appliances, which is still the largest in share, and personal and recreational goods, contributed far less to growth than their share in the index.

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