The NAB Online Retail Sales Index slowed in September (0.9%), from stronger growth in August (revised to 5.9%), on a month-on-month, seasonally adjusted basis.

• In year-on-year terms, the growth in the NAB Online Retail Sales Index, while slowing, (62.7% y/y) is amongst the strongest growth recorded in the series history.

• Results by category were mixed in month-on-month growth terms. Growth was led by small sales category, takeaway food, and larger sales category, department stores. Media, which had been relatively weak in the past few months, was fourth fastest. The largest sales category, homewares and appliances, contracted in the month, but is still up 60% compared to September 2019. Second largest category, grocery and liquor, was virtually flat in the month, but is fourth fastest over the year.

• In month-on-month terms, WA rebounded after last months contraction, to lead growth by state. ACT, Vic., NT, and Qld. also recorded growth, with the latter far more moderate. NSW, SA, and Tas. recorded a contraction in the month. While all states are up on the same period 2019, Vic. has a clear lead. In year-on-year terms, online sales for Vic. are more than double what they were in September 2019.

• Sales in both metro and regional areas slowed in the month, with the latter contracting, especially in Vic. The result this month was mixed across states, with online sales in regional Qld. growing faster than metro, and regional and metro WA on par. In year-on-year terms, metro Victoria recorded the highest growth, over double what online sales were for the same month 2019.

• Monthly growth was recorded for both domestic and international merchants, with domestic online retailers slightly outpacing international. The domestic result was driven by strong results in takeaway food, and a flat result for clothing, both of which contracted for international, although department stores sales growth for international was faster.

• We estimate that in the 12 months to September, Australians spent $40.9 billion on online retail, a level that is around 12.0% of the total retail trade estimate (Preliminary Sep 2020, Series 8501, Australian Bureau of Statistics), and about 38.7% higher than the 12 months to September 2019.

NAB Chief Economist, Alan Oster commented:

Our NAB Online Retail Sales Index continued to grow, albeit slowing in September. While metro Victoria contributed to growth in the month, regional areas, possibly with loosening lockdown measures, detracted from growth. In the heatmap section, we take a look at the change in the Media category, which has accelerated after weakness in 2019.

Takeaway food led growth in the month, and was particularly strong in TAS and VIC, with double digit growth in those states. For larger sales category, department stores, along with media, sales growth was particularly strong for international merchants. All other categories were either on par with, or slower than domestic merchants in the month. After strong growth in recent months, growth for homewares and appliances contracted in September, driven by a drop in most states except WA, ACT and VIC. Grocery and liquor (-0.1% mom, s.a.) recorded a slight contraction, after 14 months of continuous growth, although the state results for this category are far more mixed. Growth for this category in NSW, NT, QLD and WA was offset by a contraction in ACT, SA, TAS, and VIC.

WA led growth in the month, rebounding from a contraction in online sales in August. The three most populous states represent just over 80% of all online sales, slightly above their share of the population. Of these three states, VIC recorded the strongest growth in the month, while NSW contracted, and QLD recorded growth slightly below the national average. VIC was amongst the fastest for growth in the large spend share categories. In year-on-year terms, online sales in Victoria are more than double what they were in the same month 2019. This is well beyond any Christmas period trading that we have observed for VIC online retail in both growth, and absolute dollar, terms.

Despite slowing, metro areas continued to grow, supported by Vic and WA, while regional areas contracted in the month. The state result for QLD was boosted by regional growth, with metro areas contracting slightly. In year-on-year terms, Victoria leads in both metro and regional sales growth, with metro (+127%) more than double what it was in September 2019, and regional also up strongly (+65.6%).

In terms of merchant location, sales for domestic merchants slowed from strong growth in the month prior, while sales growth for international continued to rebound from the contraction in June. In year-on-year terms, domestic merchants have significantly outpaced international.

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