The NAB Online Retail Sales Index growth rebounded in January (4.0%), from a revised contraction in December (-4.7%), on a month-on-month, seasonally adjusted basis.

• In year-on-year terms, the growth in the NAB Online Retail Sales Index accelerated (45.6% y/y). While slower than the record-breaking period between April and November 2020, it remains elevated.

• All categories except media recorded growth in seasonally adjusted, month-on-month, terms. Strongest growth was recorded by the smallest spend share categories, takeaway food, and games and toys, and midsize categories, fashion, and personal and recreational goods. The largest category, homewares and appliances, recorded growth in line with the overall index. Grocery continued to grow in January, albeit slower than the overall index, erasing the slowdown from September to November 2020.
• In month-on-month terms, growth was led by the big sales states of NSW and VIC, while small sales state, TAS, contracted for a second month.  All states other than TAS recorded growth in January. SA, which contracted heavily a month prior, recorded very moderate growth, well below the national average. In year-on-year terms, VIC still leads, along with other large sales state NSW.
• Regional areas bounced back more strongly in January, with higher growth relative to metro areas after both recorded a large contraction in December. The results were quite mixed, even within states, with growth in metro TAS again much worse than regional areas, which was flat.  Regional growth strongly outperformed metro in NSW and WA, while growth was much closer for all other states that recorded growth. A different pattern emerges over the year, where metro, particularly VIC, outpaces regional areas.
• Sales growth was recorded for both domestic and international merchants in month-on-month terms, with domestic online retailers stronger. Domestic merchants led sales growth across most categories, except personal and recreational goods, and media, where international recorded a smaller contraction.
• We estimate that in the 12 months to January, Australians spent $45.61 billion on online retail, a level that is around 12.9% of the total retail trade estimate (Preliminary January 2021, Series 8501, Australian Bureau of Statistics), and about 49.1% higher than the 12 months to January 2020.

NAB Chief Economist, Alan Oster commented:

In month-on-month terms, our NAB Online Retail Sales Index returned to growth in January, after a short sharp contraction in December. When comparing this January to 2020, i.e. in year-on-year terms, the index continues to grow strongly, just under the pace set between April and November (50% to 60%). Lockdowns are likely to be again impacting the data, with NSW returning to monthly growth rates from mid-2020. It is likely that February data will see some effect from the WA and VIC ‘Circuit breaker’ lockdowns, given that in November, SA had experienced a 3 day lockdown, and recorded the highest growth for that month.

The relevance of takeaway food is increasing for online retail. While it is still the smallest share of spend, with such high growth over the past year, its share of spend has increased from 4.1% a year ago to 5.3% in January. The largest contribution to growth for this category in January was from the two biggest sales states, NSW and VIC. Growth was in line with overall growth for the largest sales category, homewares and appliances. But this growth was far from uniform across states, with the big drop in homewares and appliances in the month for TAS contributing heavily to the result for that state. This large contraction more than neutralised growth for other categories in TAS. In contrast, for NSW and VIC, sales for the Homewares were either at or above state growth.

In January, most states recorded growth, but the growth tended to be more mixed by region. In NSW and WA, regional areas far outpaced metro areas in month-on-month terms, whereas the result for VIC was far closer, and QLD and SA recorded higher growth in metro areas. For TAS, as mentioned above, a big drop in Homewares and appliances, driven by metro areas, contributed heavily to the result for that state.  Over the year though, metro areas are still outpacing regional, led by VIC.

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