• Growth contracted for the NAB Online Retail Sales Index in October (-5.6%), following a slight downward revision to September (3.2%, previously 3.3%), on a month-on-month, seasonally adjusted basis.
• In year-on-year terms however, the NAB Online Retail Sales Index continued to grow, albeit slowing in October (21.0% y/y). It is likely, with easing of restrictions, that year-on-year growth will now begin to moderate, as it had done earlier in the year, prior to the recent lockdowns in the key sales states.

• A contraction in growth was recorded in month-on-month terms for all categories in October, led by department stores, which had already slowed a month prior, and personal and recreational goods. The contraction in large sales category, homewares and appliances, was slightly better than the overall index change. More moderate declines were observed in takeaway food, and grocery and liquor. In year-on-year terms, these two categories recorded the fastest growth.
• NSW, ACT and VIC, which ended lockdowns during October, saw the largest contractions in month-on-month terms. These three had in previous months seen the most rapid growth in online sales, and indeed, in year-on year-terms, NSW and ACT still lead. In month-on-month terms, TAS, which entered a short lockdown in mid-October, recorded strong growth. Some consistency this month with department stores, which led the category contraction, aligned to the biggest drop by state. For smaller category, takeaway food, the result was more mixed, with the territories, TAS, and SA recording strong growth, and VIC almost flat.
• The contraction in growth was higher in metro areas relative to regional. The monthly result was heavily influenced by NSW, with a pronounced fall in metro areas almost double that of regional. More mixed results from other states, with VIC regional slightly worse, and the jump in TAS driven by metro. In year-on-year terms, NSW growth in metro areas is about one and a third times that of regional, with WA and SA more than double, while VIC and TAS online growth has been more regional.
• Sales growth contraction was recorded for both domestic and international merchants this month, with domestic department stores, and international media, particularly weak.
• NAB estimates that in the 12 months to October, Australians spent $52.24 billion on online retail, a level that is around 14.3% of the total retail trade estimate (September 2021, Series 8501, Australian Bureau of Statistics), and about 24.8% higher than the 12 months to October 2020.

NAB Chief Economist, Alan Oster commented:

In month-on-month terms, our NAB Online Retail Sales Index contracted in October, following on from lockdown enhanced strong growth in recent months. Despite the monthly contraction, comparing this October to the same month 2020, i.e. in year-on-year terms, the index continues to exhibit considerable strength, up 21%. Given that the base of October 2020 had already grown over 57.6% on October 2019, the share of online retail sales continued to increase.

The contraction in monthly online sales in October was driven by the ACT, NSW, and VIC. These three had seen strong online sales growth during the lockdown periods over the past few months, and the current monthly result is likely to be partially reflective of an easing in restrictions during October. Interestingly, WA also contracted, suggesting separate factors at play for that state. In year-on-year terms, while all states were positive, ACT (67.4%) and NSW (38.6%) are driving the strong growth rate, with all other states growing under 20% year-on-year.

As lockdowns eased part way through October, growth in month-on-month terms contracted for all categories. The results were generally consistent where restrictions were eased, except ACT for takeaway food, which continued to grow in the month. Tas, which entered a short lockdown during the month, went against the broader trend for some categories, but particularly large sales category, homewares and appliances. The category which led the monthly contraction, department stores, was uniform except NT. While grocery and liquor also contracted in the month, it recorded strong year-on-year growth, so given its relative size, it has contributed heavily to the year-on-year growth in the index. See this month’s heatmap for more detail.

Metro areas, which had grown more rapidly in recent months, recorded a larger contraction in October. Coinciding with the Hobart lockdown, metro TAS led growth in the month, while an easing in restrictions saw metro NSW lead the falls. For most states, year-on-year growth was highest for metro areas, with the exception of VIC and TAS. Part of the reason for this is the pattern of growth during the 2020 lockdown, where metro VIC had already experienced significant growth, whereas 2021 lockdowns included greater restrictions in regional areas.

Get all the insights in the NAB Online Retail Sales Index (October 2021)