• The NAB Online Retail Sales Index continued its rapid growth in March (5.6%), on a month-on-month, seasonally adjusted basis. This represents an acceleration on upwardly revised growth in February (2.2% mom, s.a.).
• In year-on-year terms, the growth in the NAB Online Retail Sales Index accelerated (+21.8% y/y s.a.) in March, and it continues to outpace the broader ABS retail sales series in year on year terms.
• Six of the eight categories recorded sales growth in month-on-month growth terms. Department Stores, a category with both conventional brands and market place aggregators, and third largest sales category, recorded the highest growth in month-on-month terms in March. The largest spend share category, homewares and appliances, also grew, at a pace slightly faster than the broader index in the month. While takeaway food is still up strongly over the year, this category, and fashion, contracted in the month.  For more detail, see Charts 3, 5, 7 & 8 below.
• In month-on-month terms, all states and territories recorded online sales growth. ACT recorded the strongest growth rate in online retail sales in March, with NSW leading the major sales states. In year-on-year terms, all states except TAS and NT recorded double digit growth, with Vic. leading the large states.
• Sales growth in metro areas was considerably stronger relative to regional areas in both month-on-month and year-on-year terms. In year-on-year terms, Vic. metro recorded the strongest growth for metro areas, while SA was fastest for regional growth. See Charts 15 and 16 for more detail.
• Growth in the month was driven by domestic online retailers, with sales at international merchants collapsing. By category, large spend shares homewares and appliances and department stores performed strongly for domestic retailers. The fashion category, which represents a larger share of international merchant sales, grew for domestic, but collapsed for international.  See charts 13 and 14, and table 3 for category growth and share.
• We estimate that in the 12 months to March, Australians spent $31.91 billion on online retail, a level that is around 9.7% of the total retail trade estimate (February 2019, Series 8501, Australian Bureau of Statistics), and about 11.9% higher than the 12 months to March 2019.

NAB Chief Economist, Alan Oster commented:

Our NAB Online Retail Sales Index data indicates that the rebound in online spend continued in March, with a large jump in sales. Although online retail still represents an estimated 9.7% of all retail, this share has grown in the past couple of months and indicates that, while broad retail sales have slowed, those consumers still spending are doing so with an increased online focus.

In the month, growth was strongest for the market place aggregators, with double digit growth in department store sales. Grocery and liquor, which had been growing strongly prior to the pandemic, has continued a pace, along with categories that might be boosted by self-isolation, such as games and toys, and personal and recreational goods. Potentially people have been using this time to replace existing homewares and appliances, with sales for the category, which had been relatively subdued, now growing slightly faster than the overall index. On the flipside, both fashion and takeaway food have fallen in sales growth terms in March. Having said that, the latter category is still almost double the sales of a year prior. With respect to COVID-19, evidence from overseas online sales monitors suggest that the fall in fashion sales is widespread, with the Australian market performing better than some comparable online retail markets.

The three most populous states represent just over 80% of all online sales, slightly above their share of the population. Of these three states, online sales growth in NSW grew most rapidly, with department stores a key driver. ACT currently leads in both monthly and year-on-year growth terms, but represents a small share of online spend. The key driver across most states in year-on-year terms has been the strong performance of grocery and liquor, particularly so in Vic and SA.

Representing about two-thirds of all online sales, metropolitan areas generally performed more strongly than the overall result. Over the year, Tas. regional was the only area to show a contraction in online sales.

In terms of merchant location, in March, sales at international merchants collapsed. This was particularly noticeable in their key sales category, fashion, while domestic merchant sales growth for this category was positive.  Domestic merchants, which make up the vast bulk of sales grew strongly in the month. In sales categories where international merchants have a sizeable presence, such as games and toys, they were outpaced by domestic merchants. It is likely with these results that concern over stock availability and delivery was elevated in March, and contributed to this spending behaviour.

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