• Growth for the NAB Online Retail Sales Index contracted again in March (-4.3%), following on from a contraction in February (-3.6%) on a month-on-month, seasonally adjusted basis.
• In year-on-year terms, the NAB Online Retail Sales Index continued to grow, albeit slowing in March (7.0% y/y).

• Fashion was the only category to record growth in month-on-month terms in March. The largest contraction in monthly growth was recorded by the largest category, homewares and appliances, at a rate over double that of the total index. Media, and grocery and liquor also recorded a contraction beyond the overall. In year-on-year terms, takeaway food, department stores, and games and toys lead.
• All states recorded a contraction in growth in month-on-month terms in March, with SA, WA, and VIC fairing slightly better than the overall. TAS and NSW were particularly weak, with ACT and QLD not far behind, albeit the latter slightly better than the month prior.
• The contraction in growth was worse for regional areas in the month. This was the case for all states except TAS, where metro was significantly weaker. In year-on-year terms, growth in regional areas is slowing slightly faster relative to metro, except TAS.
• Most of the contraction in growth was recorded by domestic retailers, with the contraction in international improving relative to February. For fashion, the only category to record monthly growth in March, this was solely due to international retailers, as sales at domestic retailers for this category contracted.
• NAB estimates that in the 12 months to March, Australians spent $55.24 billion on online retail, a level that is around 14.8% of the total retail trade estimate (February 2022, Series 8501, Australian Bureau of Statistics), and about 16.6% higher than the 12 months to March 2021.

NAB Chief Economist, Alan Oster commented:

In month-on-month terms, our NAB Online Retail Sales Index contracted for a second consecutive month in March. Growth over the past two years has been particularly volatile, with the standard deviation more than double when compared to the first eight years of the series. Looking through this monthly volatility, using the year-on-year and 12-months-to measures, online sales continue to grow.

Our broader measure of retail trade, the nab cashless retail index, suggests retail was up moderately in March after strong growth in January and February. So, it is likely that, with the easing of instore restrictions in most states in February, instore sales were again boosted in March, while online contracted. This result is consistent with what has been observed in the UK (BRC) and the US (Census Bureau).

For online retail, we think that it’s of interest to note that dollars spent over the past couple of months has fallen faster, in mom terms, than volumes. If this continues, it may reverse a trend observed since early 2020, where average spend per transaction had generally been rising. What this also suggests is that some online retailers may have been discounting to actively manage post-Christmas stock. This is not consistent with what has been observed in the UK and US, where prices were driving much of the increase. Fashion, the category which grew in mom terms in March resisted the broader local trend, with volumes lower, indicating the possibility of price rises driving sales growth.

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

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