Online retail saw a rebound in January, up from a revised contraction in December 2020. Source: Negative Space from Pexels.
  • Online retail recorded growth of 4.0% in January 2021
  • Takeaway food saw the strongest month-on-month growth
  • Victoria and New South Wales recorded the strongest month-on-month growth

According to the NAB Online Retail Sales Index (which measures all online retail spending by consumers using electronic payment methods such as credit cards, BPAY, and PayPal), online retail bounced back from a sharp decline in December 2020 (-4.7%) to a growth of 4.0% in January 2021 (this is on a month-on-month basis and seasonally adjusted).

NAB’s Chief Economist, Alan Oster attributes the growth figures largely to the lockdowns to prevent the spread of COVID-19.

“Lockdowns are likely to be again impacting the data, with NSW returning to monthly growth rates from mid-2020. It is likely that February data will see some effect from the WA and VIC ‘Circuit breaker’ lockdowns, given that in November, SA had experienced a 3-day lockdown, and recorded the highest growth for that month.”

When breaking down the data by industry on a month-on-month basis, all categories except media recorded positive growth. A notable increase in relevance was seen in takeaway food, with sales increasing by almost 10%, followed by fashion (around 7.5%), games and toys (around 6%) then personal and recreation (around 4%).

Online retail sales by industry, month-on-month, seasonally adjusted basis. Source: NAB.

When breaking down the data by state on a month-on-month basis, all states except Tasmania recorded positive growth. The largest contribution to growth for this category in January was from the two biggest sales states, New South Wales and Victoria.

Online retail sales by state, month-on-month, seasonally adjusted. Source: NAB.

“Growth was in line with overall growth for the largest sales category, homewares, and appliances. But this growth was far from uniform across states, with the big drop in homewares and appliances in the month for TAS contributing heavily to the result for that state,” explained Mr Oster.

It was estimated that Australians spent $45.61 billion on online retail from January 2020-21, a level 49.1% higher than the previous 12 month period.

However, with the easing of restrictions across Australia, online retail may decline as we return to normalcy, and people are back out and about in brick-and-mortar stores. It will be interesting to see in the long-term how the pandemic has permanently changed the way we shop. Perhaps the pandemic has accelerated the process of creative destruction for traditional retail. Here is an interesting article that delves more into this.

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NAB’s full report, NAB ONLINE RETAIL SALES INDEX JANUARY 2021 is available to view online.

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