• The NAB Online Retail Sales Index accelerated rapidly in July (6.7%), on a month-on-month, seasonally adjusted basis. A strong contribution to the headline this month is the online sales activity from Victoria.
• In year-on-year terms, the growth in the NAB Online Retail Sales Index (+62.6% y/y) has broken the previous record set in April.
• All eight categories recorded a sales growth in month-on-month growth terms. Growth was led by smaller sales categories, games and toys, and fashion, with these two categories rebounding from weakness in the prior two months. Second largest category, grocery and liquor, has now recorded continuous growth for the past 13 months. With moderate but stable growth over this period, the category is the third fastest in year-on-year growth terms. The largest sales category, homewares and appliances, was second slowest in the month. The result for this category was saved from contraction by a strong growth in Victoria, and to a lesser extent NT and SA. For more detail, see Charts 3, 5, 7 & 8 and table 3 below.

• In month-on-month terms, the two largest online sales states led growth, with Victoria the clear standout, recording growth well above the other states. Tasmania has now recorded three consecutive months of contraction in online sales growth, though this is on the back of an exceedingly strong April result. In year-on-year terms, all states recorded double digit growth, with Vic. leading overall, now almost double what it was in the same month 2019. See charts 4,6,9-14, and table 3 for more detail.
• Sales in both regional and metro areas recorded growth in July, with the latter much faster in the month. Metro and regional Victoria particularly strong. The contraction for Tasmania was driven by metro areas, with regional areas growing in the month. In year-on-year terms, metro Victoria recorded the highest growth, almost double what online sales were for the same month 2019. See Charts 15 and 16 for more detail.
• Monthly growth was recorded for both domestic and international merchants, with domestic online retailers outpacing international. The only category where this was not the case was homewares and appliances, where the merchants grew at the same pace. See charts 13 and 14, and table 4 for category growth and share.
• We estimate that in the 12 months to July, Australians spent $37.4 billion on online retail, a level that is around 11.1% of the total retail trade estimate (Preliminary July 2020, Series 8501, Australian Bureau of Statistics), and about 28.6% higher than the 12 months to July 2019.

NAB Chief Economist, Alan Oster commented:

Our NAB Online Retail Sales Index jumped in July, with strong monthly growth in Victoria contributing heavily to the result. While this data is prior to the stage 4 restrictions in metropolitan Melbourne and Mitchell shire, stage three was clearly impacting the July result. Below, in the heatmap section, we take a look at the change over the past year.

Games and toys, fashion, and takeaway food all recorded double digit growth in the month. Combined, these categories represent about a quarter of all online sales. These three categories have also been the most volatile over the past year, with periods of strong contraction in sales typically followed by a rapid rebound. Homewares and appliances, the largest sales category in the index, which also represents about a quarter of sales, grew at a more moderate pace. In year-on-year terms, however, this category is currently the 4^th fastest and has contributed strongly to the headline result.

The three most populous states represent just over 80% of all online sales, slightly above their share of the population. Of these three states, Victoria recorded the strongest growth in the month, well above growth in the other states. In year-on-year terms, online sales in Victoria are nearly double what they were in the same month 2019. The state also led growth in each category in the month. The strong result for Victoria was, like the national result, driven by games and toys, and fashion. Unlike the national result, larger sales category, department stores, was in third place for growth, with takeaway food fourth. Victoria also recorded strong growth in homewares and appliances, with SA and NT the only others to record growth for this category.

Both metro and regional areas grew in the month. In year-on-year terms, Vic. leads in both metro and regional sales growth, with metro (+97.9%) almost double what it was in July 2019. In the month, the contraction in Tas. was driven by metro areas, with regional areas continuing to grow.

In terms of merchant location, sales for domestic merchants accelerated from mild growth in the month prior, while sales growth returned to international merchants after a contraction in June. Domestic merchants have significantly outpaced international over the year.

For further details, please see the NAB Online Retail Sales Index July 2020.