• The NAB Online Retail Sales Index continued to grow in December (+2.0%) on a month-on-month, seasonally adjusted basis. This follows on from the upwardly revised strong growth in November (2.7% mom, s.a.). The strength in December was boosted by the weekend continuation of the Black Friday sales event into the Cyber Monday period.
• In year-on-year terms, the growth in the NAB Online Retail Sales Index strengthened (+13.3% y/y s.a.) in December, and continues to outpace the broader ABS retail sales series.
• All categories, except fashion, recorded sales growth in month-on-month growth terms. The largest sales category, homewares and appliances (+1.5% mom, s.a.), continued to grow at a rate lower than the overall. Growth was again strongest in the month for the smallest spend share category, takeaway food, followed by second smallest spend share category, games and toys, and larger spend share category, department stores. Grocery and liquor sales accelerated in the month (+1.2% mom, s.a.), and is approximately 17.8% larger compared to the same period 2018. For more detail, see Charts 3, 5, 7 & 8 below.
• In month-on-month terms, all states and territories except Tas. recorded sales growth. QLD and ACT grew fastest in the month, though Vic, which had a much slower sales month, still leads in year-on-year terms.
• Sales growth in metro areas grew faster than regional areas on a month-on-month basis. In year-on-year terms, Qld was strongest for metro areas, while Vic was fastest for regional growth. See Charts 15 and 16 for more detail.
• The slightly slower growth for domestic merchants in December was in-line with the overall index. International merchant sales, while still positive, slowed far more than the total. In year-on-year terms, international merchant sales continue to recover from a sales slump in the first half of the year. In contrast to the headline result, fashion for international retailers recorded growth in the month, and personal and recreational outpaced domestic retailer growth. See charts 13 and 14, and table 3 for category growth and share.
• We estimate that in the 12 months to December, Australians spent $30.53 billion on online retail, a level that is around 9.3% of the total retail trade estimate (November 2019, Series 8501, Australian Bureau of Statistics), and about 9.7% higher than the 12 months to December 2018.

NAB Chief Economist, Alan Oster commented:

Our NAB Online Retail Sales Index data indicates that, while slowing slightly, growth continued in December. In contrast, our broader estimate of retail trade indicates significantly weaker overall sales. Looking through the month-to-month volatility, sales growth seems to have accelerated in year-on-year terms.

From our data, online retail sales tend to be more sensitive to sales events. In November we looked at the impact of the Black Friday sales event. We now include the surrounding days to see the effect of the 4-day sales event between Black Friday and Cyber Monday. The spike in sales for these days was large enough that it is the likely cause of shifting seasonal factors, whereby December this year increased in importance. Having said that, in our data, November remains the key month for online retail. For more detail on this sales event, we have a special in focus section below (see page 6).

The smallest sales category, takeaway food, continues to lead growth, followed by second smallest category, games and toys, with rapid growth also for larger sales category, department stores. The largest sales category, homewares and appliances, continued to grow in December, and has returned to growth, albeit moderate, in year-on-year terms. Sales growth accelerated for the second largest sales category, grocery and liquor, with this category also up strongly in year-on-year terms. Fashion was the only category to record a contraction in sales growth in the month.

The three most populous states represent just over 80% of all online sales, slightly above their share of the population. A rebound in monthly sales growth puts Queensland in the lead for the large sales states, with the ACT leading the smaller sales areas. Victoria continues to lead in year-on-year growth terms.

Representing about two-thirds of all online sales, metropolitan areas recorded growth in line with the overall result, while regional area growth was much slower. In year-on-year terms, Queensland led metro growth, while Victoria leads regional areas on the same basis.

By merchant location, international retailers grew at a much slower rate than the overall index, with domestic retailers slightly faster. While fashion growth broadly contracted, this key source of sales for international retailers continued to grow. International retailers also outpaced domestic retailers in the personal and recreational category. Growth for the largest sales category, homewares and appliances, was dominated by domestic retailers, with international slightly contracting. While a small share of spend, international retailers also seem to be in retreat in the grocery and liquor category.

It is worth noting here that our definition of a domestic online retailer can include those merchants whose parent organisation might be overseas with an Australian subsidiary. Solely using GST as a key defining characteristic of domestic and international is no longer appropriate given changes made in July 2018.

For further details, please see the NAB Online Retail Sales Index December 2019