• Growth contracted for the NAB Online Retail Sales Index in March (-0.5%), following on from a revised contraction in February (-0.1%, previously +0.1%), on a month-on-month, seasonally adjusted basis.
• In year-on-year terms, the growth in the NAB Online Retail Sales Index slowed (26.6% y/y). The base effects from the high sales growth period of 2020 are beginning to affect the year-on-year comparisons. Thus, we expect the moderating influence that this has had on growth rates to continue. 

• Mixed results again this month, with sales growth in five categories offset by larger falls in other key categories. Strong growth again recorded for department stores, fashion, and takeaway food. Grocery and liquor, and media, returned to growth after last months contraction. These were offset by a large fall in personal and recreational goods, and the largest sales category, homewares and appliances.
• In month-on-month terms, the two states that led growth in February, WA and Vic, led the contraction in March. NSW and ACT continued on from February’s contraction, albeit more mild in March. Strongest growth in the month was recorded in smaller sales state, TAS, supported by department stores, fashion, and against the national trend, homewares and appliances. Relatively more moderate growth was recorded in QLD and SA.
• After two months of stronger relative growth, the monthly contraction in online sales was slightly higher in Regional areas. The headline contraction for WA was more pronounced in regional areas, while for Vic, metro areas fared worse. In QLD, metro area growth was almost double that of regional areas, while TAS was relatively even. In year-on-year terms, metro VIC continues to outpace all other metro areas, but the gap has narrowed, and for March, TAS regional recorded the highest growth for this metric.
• Sales growth was again recorded for international merchants in month-on-month terms, with domestic online retailers continuing on from last months contraction. Sales growth for domestic merchants was slower in all categories, except department stores, and media.
• We estimate that in the 12 months to March, Australians spent $47.3 billion on online retail, a level that is around 13.3% of the total retail trade estimate (Preliminary March 2021, Series 8501, Australian Bureau of Statistics), and about 46.7% higher than the 12 months to March 2020.

NAB Chief Economist, Alan Oster commented:

In month-on-month terms, our NAB Online Retail Sales Index contracted in March, after a revised slight contraction in February. When comparing this March to 2020, i.e. in year-on-year terms, growth, while still double digit, is now moderating. Part of this slowdown in year-on-year growth is as a result of the base effects of the initial online spike of March 2020. At that time, online growth accelerated to +30.3%(y/y) and would go higher still by April, as travel and trade restrictions impacted in-store retailing. An element of perspective is advised when interpreting the year-on year results over the next few months.

The contraction in sales this month was driven by a drop in homewares and appliances in most states, along with games and toys, and an even larger drop in personal and recreational goods. All states recorded growth in department stores, with other categories mixed by state. In the sales period post the circuit breaker lockdown for example, VIC and WA grocery and liquor contracted, but grew strongly for other states, especially QLD and SA. The moderating growth in year-on-year terms is no more pronounced than in Victoria, which is now more in line with growth in other large states. Albeit still above the national average, at 31.3% it is some way from the 119.5% growth of August 2020.

At the geographic level, in year-on-year terms, growth for metro and regional areas has somewhat converged, and while Vic still leads metro, the percentage point difference is not as great as it has been.

In month-on-month growth terms, it appears that much of the slowdown has affected domestic retailers more than international, with the latter continuing to grow. Categories like homewares and appliances, that are predominantly domestic, contracted in the past month along with the broader index, while fashion, with a larger international presence, recorded a strong contribution to growth from international retailers. After last months strong growth, international game and toy retailers contracted more than domestic, contributing heavily to the headline result for that category. Over the past year, growth has been driven overwhelmingly by domestic online retailers, but this appears to be slowing.

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