• On a month-on-month, seasonally adjusted basis, growth for the NAB Online Retail Sales Index continued to contract in June (-1.5%), following on from a more mild contraction in May (-0.8%).
• In year-on-year terms, the NAB Online Retail Sales Index contracted slightly in May (-0.1% y/y).

• By category, results generally followed the headline, with most contracting this month, with the exception of personal and recreational goods, which reordered moderate growth. The largest contraction in the month was recorded by takeaway food, though this category still leads growth in year-on-year terms. Department stores, which recorded growth last month, also recorded a contraction above the index, while the largest sales category, homewares and appliances, was in line. In year-on-year terms takeaway food, grocery and liquor, and media, continue to grow.
• The state result was a bit more mixed in the month, with WA, SA, and NT growth outweighed by a large contraction in VIC, and more mild contractions in QLD, NSW, TAS, and ACT. In year-on-year terms, the larger contraction in VIC outweighed growth in other large sales states like NSW and QLD.
• The contraction in growth for metro areas contributed heavily to the overall result, while regional areas improved, to record a much smaller contraction. VIC played a significant part in this result as well, with metro areas contracting well beyond the overall index, while regional areas for the state recorded growth. In year-on-year terms, growth in metro areas was much slower than regional areas.
• The contraction in growth was larger in June for domestic retailers, with international improving to record slight growth. Fashion, and games and toys, contributed heavily to the monthly result for international. Over the year, domestic retailers continue to outpace international, albeit both contracted in June.
• NAB estimates that in the 12 months to June, Australians spent $55.72 billion on online retail, a level that is around 14.5% of the total retail trade estimate (May 2022, Series 8501, Australian Bureau of Statistics), and about 14.5% higher than the 12 months to June 2021.

NAB Chief Economist, Alan Oster commented:

In month-on-month terms, our NAB Online Retail Sales Index contracted again in June. Apart from the Omicron induced spike in January, the monthly change has generally been negative since October. This coincided with the ending of lockdowns in the larger states, supporting the broader rebound in instore retail sales. In year-on-year terms, our series recorded a slight contraction. This still compares favourably with some published overseas series. The UK measure (BRC), for example, indicates non-food UK online retail sales contracted 9% in year-on-year terms. In addition, our measure, in 12-months-to terms, remains positive based on the summation of Delta induced elevated activity between July and October 2021, and the Omicron variant of January 2022.

In our broader weekly spending measure, we observed an EOFY boost in the final week of June. However, when rolling up to the month, our Cashless retail indicator suggests that this last week of activity was not enough to outweigh the softer activity earlier in the month. It is likely that inflationary pressures and concerns over the future direction of borrowing costs are beginning to weigh on the consumer.

For online retail, looking beyond the monthly volatility, what we observed in the past twelve months is the strong contribution to the index made by department stores, grocery and liquor, and takeaway food. These three categories make up about 40% of the index, but have contributed about 60% of the growth over the past year. In contrast, largest sales share category, homewares and appliances, has contributed much less to growth than its proportion of the index, while other categories like fashion have been on par.

This month in the heat map section, we zoom in on the latest year-on-year results in Victoria for department stores, and grocery and liquor, to help visualise the result from the metro and regional areas.

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