The NAB Online Retail Sales Index contracted in October (-0.7%), from stronger growth in September (revised to 1.2%), on a month-on-month, seasonally adjusted basis.

• In year-on-year terms, the growth in the NAB Online Retail Sales Index, while slowing, (59.3% y/y) remains amongst the strongest growth recorded in the series history.

• Results by category were mixed in month-on-month growth terms. While category growth was again led by small sales category, takeaway food, larger sales categories like, homewares and appliances, grocery and liquor, and department stores, contracted, along with media. In year-on-year terms, the larger sales categories are up between 55% and 80%, contributing heavily to the headline result.
• In month-on-month terms, NSW and SA rebounded after last months contraction, along with strong sales growth in NT. While all other states contracted in the month, sales growth for all states remains strongly positive when compared to October 2019. Though slowing in year-on-year terms, online sales for Vic. are still more than double what they were in October 2019.
• Sales in regional areas improved from a contraction in the previous month to record no growth in October, while most metro areas contracted. The result this month was again quite mixed across states, with online sales in regional WA and NSW up strongly, while regional sales in VIC and TAS were considerably weak.
• Sales growth for both domestic and international merchants contracted in month-on-month terms, with international online retailers weaker. While sales growth was negative for both, domestic fashion and games and toys were stronger, although like last month, international department stores outpaced domestic.

• We estimate that in the 12 months to October, Australians spent $42.2 billion on online retail, a level that is around 12.3% of the total retail trade estimate (Preliminary Oct 2020, Series 8501, Australian Bureau of Statistics), and about 41.2% higher than the 12 months to October 2019.

NAB Chief Economist, Alan Oster commented:

Our NAB Online Retail Sales Index contracted in October, after four strong months of growth. When comparing this October to 2019, i.e. in year-on-year terms, the index continues to grow strongly, up about 60%. Results were mixed across the key categories by state this month.

Takeaway food again led growth in the month, and in year-on-year terms. With the relatively strong growth over this period, its share of the index has increased. In October 2019, this category represented about 3.5% of the index, but with rapid growth over the past year, now represents about 5%. Online takeaway food growth was particularly strong in the ACT and NT this month, and all states except TAS recorded growth. After strong growth last month, larger sales category, department stores, contracted in October, but is still up strongly over the year. Interestingly for this category, while international outpaced domestic in the month, the reverse is true over the year. This is partly driven by an Australian retailer focus on ‘marketplace’ arrangements. While the largest sales category, homewares and appliances, has recorded two consecutive months of contraction, at +60.2%, this category is one of the strongest in year-on-year terms.

NT followed on from strong growth last month, to lead sales growth in October, though it remains the slowest in year-on-year terms. The three most populous states represent just over 80% of all online sales, slightly above their share of the population. Of these three states, NSW rebounded after a contraction the month prior, while VIC and QLD both contracted. In year-on-year terms, with sales about double the same month 2019, VIC remains by far the fastest growing state. It is worth noting that the period covered by this data only includes three days where most metro Vic physical instore retail reopened. Next month we will get a better view of whether the reopening of physical retail in November is offset by the countervailing effect of November sales events.

Metro areas contracted in the month, and regional areas were flat. In NSW and WA, growth was particularly strong for regional areas, while metro for the former recorded more moderate growth, and for the latter, a contraction. While Vic regional areas recorded a significant drop in October, in year-on-year terms, it is still up strongly, albeit outpaced by metro areas, where sales are still more than double the same period 2019. In year-on-year terms, NSW regional areas have outpaced metro sales growth.

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