• Growth for the NAB Online Retail Sales Index rebounded in January (7.2%), following on from a contraction in December (revised -3.7%, was -4.5%), on a month-on-month, seasonally adjusted basis.
• In year-on-year terms, the NAB Online Retail Sales Index continued to grow, and accelerated in January (20.0% y/y).

• All categories recorded growth in month-on-month terms in January. Growth in sales was led by department stores, at a rate double the overall index, rebounding after a significant drop in December. Large sales category, homewares and appliances, also rebounded, although at a rate slower than the overall. Games and toys, takeaway food, and fashion grew above the overall rate, while grocery and liquor was just below. In year-on-year terms, department stores, takeaway food, and grocery and liquor lead.
• All states recorded growth in month-on-month terms in January, with ACT and TAS recording double digit growth. For the large sales states, growth was slightly above the index for QLD and VIC, while NSW was slightly below.
• Growth was about the same for metro and regional areas in the month. This was particularly the case for NSW. While VIC and SA recorded sales growth higher for regional areas, QLD, WA and TAS recorded stronger metro growth. In year-on-year terms, growth in metro areas was generally stronger relative to regional, except in SA, where metro was slower.
• Sales growth was recorded for both domestic and international merchants this month, with domestic retailers recording growth stronger than the overall index, and faring better in most categories, except media, homewares and appliances (albeit close to even), and takeaway food. See charts 13 and 14, and table 4 for category growth and share.

• NAB estimates that in the 12 months to January, Australians spent $54.23 billion on online retail, a level that is around 14.7% of the total retail trade estimate (December 2021, Series 8501, Australian Bureau of Statistics), and about 19.6% higher than the 12 months to January 2021.

NAB Chief Economist, Alan Oster commented:

In month-on-month terms, our NAB Online Retail Sales Index returned to growth in January, and the contraction observed in November and December has been revised up. January is typically a more subdued month for online retail, but this year, with the spike in Omicron cases, more people chose the click option. The jump in January also altered the seasonal estimates for surrounding months, with November and December now revised upwards.

It would appear a preference to avoid close contact and in-store restrictions emerged over this period, with people continuing to restrict in-person social contact, despite a general easing of regulated restrictions in most states. There are also other constraints that may have helped online retailers in recent months. With consumers facing uncertainty about instore supply of goods, the ability to check and confirm orders online may have also factored into current online activity.

For the category that led growth in the month, department stores, the result was consistent across regions, except NT and SA, where it ranked second behind games and toys, and homewares and appliances respectively. In January, there was also strong growth in food related spending, relative to a year prior, with both grocery and liquor, and takeaway food growing strongly. This supports the above notion, that consumers were increasingly opting for reduced direct social contact during the Omicron wave, even for categories considered staples. Our broader consumer monitor, which includes in-store and at-venue purchase, suggests that spending in hospitality had begun to recover over the past couple of weeks. If this continues, we may see a tempering of these rapid growth rates, as the Omicron induced boost to online sales ease.

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

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