• Growth for the NAB Online Retail Sales Index contracted in February (-3.5%), following rapid growth in January (7.2%), on a month-on-month, seasonally adjusted basis.
• In year-on-year terms, the NAB Online Retail Sales Index continued to grow, albeit slowing in February (13.4% y/y).
• Takeaway food was the only category to record growth in month-on-month terms in February. While games and toys, and media were virtually flat, all other categories contracted, led by grocery and liquor, and department stores. The contraction in large sales category, homewares and appliances, was at a rate slightly better than the overall index. In year-on-year terms, takeaway food, department stores, and grocery and liquor still lead.
• All states recorded a contraction in growth in month-on-month terms in February, with the smaller sales states fairing worse. For the large sales states, the contraction in growth was better for VIC, NSW, and WA, with QLD weaker.
• The contraction in growth was about the same for metro and regional areas in the month, although at a state level, metro QLD and regional SA faired far worse than the overall. In year-on-year terms, growth in metro areas was generally stronger relative to regional, especially in NSW, SA, WA, and TAS.
• Sales growth contraction was recorded for both domestic and international merchants this month, with domestic retailers recording a larger contraction relative to international. This was the case for most categories, except grocery and liquor, games and toys, and takeaway food. See charts 13 and 14, and table 4 for category growth and share.
• NAB estimates that in the 12 months to February, Australians spent $54.7 billion on online retail, a level that is around 14.7% of the total retail trade estimate (January 2022, Series 8501, Australian Bureau of Statistics), and about 17.4% higher than the 12 months to February 2021.

NAB Chief Economist, Alan Oster commented:

In month-on-month terms, our NAB Online Retail Sales Index contracted in February. For our online series, growth over the past two years has been particularly volatile, with the standard deviation more than double that compared to the first eight years of the series. Looking through this monthly volatility, using the year-on-year and 12-months-to measures, online sales continue to trend up.

Our broader measure of retail trade, the nab cashless retail index, suggests retail was up in February. So, it is likely that, with the easing of instore restrictions in most states in February, instore sales were boosted. The national two dose vaccine rate currently sits at around 95% of those aged 16plus, and over 65% for boosters. At the same time, rates of infection from the omicron wave, which peaked in most states December and January, began to ease. It is clear from the past two years that variant spikes are correlated with stronger online activity, as is subsequent easing once the peak passes.

By category, interest in takeaway food continued, albeit at a rate slower than the prior two months. For all other categories, the monthly result was either flat or recorded a contraction in growth. The biggest drop in monthly growth was in grocery and liquor, but this follows strong growth in January. The contraction in growth for the category was generally consistent across states, except VIC and ACT, which fared slightly better. Over the year though, grocery and liquor has contributed heavily to growth in online sales, except for WA, where growth was more subdued.

This month in the heat map section, we take a look at Media, and the change in growth compared to the pre-pandemic period.

Get all the insights in the NAB Online Retail Sales Index (February 2022)