• On a month-on-month, seasonally adjusted basis, growth contracted in December (-3.9%), following a considerably strong November (6.5%).
• In year-on-year terms, while growth slowed in December (11.4% y/y), it remained positive, albeit this metric is a comparison to a period where growth was still contracting.
• Broad-based contraction in December by category, after rapid growth in November. The contraction in growth was led by the largest sales category, homewares and appliances, along with games and toys, and department stores. Worth noting that these same categories led growth in November. In year-on-year terms, personal and recreational goods continue to lead.
• A contraction in growth for all states this month, with the smaller states generally fairing worse. NSW and VIC, which recorded considerable growth in November, contracted by a smaller rate relative to the smaller sales states. Some of the smaller states had also recorded smaller gains in November.
• While a larger contraction was observed for metro areas this month, in November their growth far exceeded regional. In year-on-year terms, metro areas continue to lead regional, although the gap between the two is still relatively small compared to the years immediately prior.
• Both domestic and international retailers recorded a contraction in the month, with the former performing worse. However, to keep this in context, domestic retailers outpaced international by some margin in November. In year-on-year terms, growth for domestic has outpaced international since November.
• NAB estimates that in the 12 months to December, Australians spent $55.11 billion on online retail, a level that is around 13.0% of the total retail trade estimate (November 2023, Series 8501, Australian Bureau of Statistics), and a continuation of moderate growth (2.8%) relative to the 12 months to December 2022.

NAB Chief Economist, Alan Oster commented:

While we observed a contraction in online sales growth in December, for context, this followed considerably strong October and November results. When these results are aggregated for the December quarter, this has translated into high single digit growth when compared to the September quarter, and low double-digit growth when compared to December quarter 2022. This growth has also revived the 12-months-to metric, albeit at a more moderate pace relative to what we observed during lockdowns. Part of this, as we have alluded to in past reports, reflects base effects of the comparison period. Between mid-2022 and the first quarter of 2023, online sales slowed as people returned to physical stores. It is worth noting that even during that period, the online share of total retail did not fall substantially. Given the broader trend slowing in total retail, it is likely that, should online continue to grow even at a moderate pace, its share of this measure will continue to gradually increase.

We note that there is broad commentary about the effect of sales events and shifting seasonal patterns for retail sales. For the history of this time series, our data has highlighted the importance of November in annual online retail sales. In the first couple of years of the series, this emphasis was only marginally more than December. As consumers adapted to a combination of factors, like delivery schedules and sales events, the importance of November in the online calendar has grown to a point where the dollars spent in this month are about 1.25 times the December spend, and 1.5 times the sales of the average month for the rest of the year. As online retail sales gradually increase its share of total retail sales, it is likely that this change to seasonal patterns will become more apparent in the broader series.

Get all the insights in the NAB Online Retail Sales Index (December 2023)