• On a month-on-month, seasonally adjusted basis, the contraction in growth, which has been a feature of the index for most of the year, ended with a return to growth in September (0.2%), following on from a contraction in August (revised -3.3%, previously -3.5%).
• In year-on-year terms however, the NAB Online Retail Sales Index recorded another large contraction in September (-20.6% y/y). It is again worth noting this is compared to a period of exceptionally strong growth in September 2021 (+29.5%).
• Mixed results by sales category this month, with large sales category, homewares and appliances, along with fashion, personal and recreation, and games and toys contracting. This was slightly outweighed by department stores, grocery and liquor, takeaway food, and media, which recorded growth. In year-on-year terms, takeaway food, and media, continue to grow, defying the overall trend.
• A contraction in the two largest sales states, NSW and VIC, was outweighed, albeit slightly, by growth in all other states in the month. In year-on-year terms, however, the much larger contraction in NSW, VIC, and ACT outweighed growth in WA, SA, TAS and NT. Again, some perspective is warranted here, with the comparison made to a period in 2021 of exceptionally high growth.
• Regional areas in all states, except WA and TAS, recorded growth in September. In contrast, metro areas recorded another contraction, with the result strongly influenced again by metro VIC, and to a lesser extent, NSW. In year-on-year terms, overall growth in both metro and regional areas continued to contract, albeit, for regional, at about half the rate of metro areas. This was again mostly due to VIC and NSW.
• Marginal growth recorded for both domestic and international retailers in the month. Fashion, which is a key share category of international retailers, recorded a stronger contraction relative to domestic, while the headline result for department stores was clearly driven by domestic retailers. Over the year, domestic retailers recorded a contraction more than double the rate of international, but again, this is partly reflecting the considerable base growth a year prior for domestic retailers. See charts 13 and 14, and table 4 for category growth and share.
• NAB estimates that in the 12 months to September, Australians spent $53.82 billion on online retail, a level that is around 13.5% of the total retail trade estimate (August 2022, Series 8501, Australian Bureau of Statistics), and about 4.7% higher than the 12 months to September 2021.

NAB Chief Economist, Alan Oster commented:

In month-on-month terms, our NAB Online Retail Sales Index ended seven months of contraction, with slight growth in September. However, these rolling monthly contractions have well and truly caught up with the year-on-year metric. As mentioned previously, it is worth keeping this in context, with most states during the September quarter 2021 experiencing some form of lockdown, which boosted online sales.

Online sales growth in September 2021 remained elevated, particularly led by NSW, and VIC. To give further perspective, if we compare the current headline total to that of the same month pre-COVID (i.e. September 2022 vs September 2019), total online spend is up about 71%. This compares favourably to broader retail sales (up 26.7% on August 2019), indicating that while there has been weakness in year-on-year terms, the broader long-term strength of online retail remains intact. Having said that, the pace of the broader retail series has been considerably strong, far beyond the average growth in the decade immediately prior to the pandemic. This strong growth in overall retail sales, and the recent subdued nature of online, has meant that the share is now smaller as a result.

We have mentioned in previous iterations the three clear standout categories over the past year, in terms of contribution to growth (through the year terms) – department stores, grocery and liquor, and takeaway food. Another category with strong contribution to index growth has been media. It has recorded growth in 9 of the past 12 months, and while representing about 7% of the index, has contributed over double that to index growth. Part of this might be due to inflationary pressures, as the average spend per transaction has increased. However, in recent months, the volume of transactions has also begun to trend up again after easing in 2021. The media story also seems to be associated with areas outside metropolitan Melbourne and Sydney. This can be seen in this month’s map section.

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