National Australia Bank (NAB) has released the February figures from its Online Retail Sales Index (NORSI), reporting that online sales contracted -3.4% in February in a month-on-month (mom), seasonally adjusted (s.a.) basis.
The year-on-year (yoy) results weren't too positive either, with NORSI reporting online sales were up only 0.5% in February 2019.
These results from February represent the lowest recorded results in both the mom and yoy segments since the series began.
Source: NAB NORSI report February 2019.
All retail categories that NORSI measures experienced declines in February, with the largest decline coming from the Homewares and appliances category which slipped -4.5% (mom, s.a.) in the month.
However, in yoy terms, four categories – including Department stores – experienced growth in February.
NAB chielf economist, Alan Oster, said that the broader weakness in bricks-and-mortar retail seems to have made its way to online shopping.
"With the effect of the November sales events now passed, it appears that broader weakness in retail is flowing through to online.
"In addition, from our data we can see that while transaction volumes are growing, the average spend in each transaction appears to be falling. This may imply price deflation or it may reflect a consumer preference shift to cheaper alternatives.
"By category, Department stores still led year-on-year growth, but this category, like all other categories, contracted in month-on-month terms.
"Interestingly, the category that has been most impacted by the effects of buy now, pay later payment methods, Fashion, recorded the least negative growth in the month and was virtually flat over the year.
"The abovementioned drop in average spend on each transaction has affected some categories more than others. From our data, we observed the biggest average spend falls in Grocery and Liquor, and Media sales. In contrast, the biggest gains in average online spend per transaction was in Department stores and Takeaway food.
"On a year-on-year basis, sales growth was strongest in the largest online spend states of New South Wales and Victoria. Western Australia, which had been growing rapidly in the past few months, recorded the largest contraction in sales growth of major sales states," he said.
Source: NAB NORSI report February 2019.
As part of the expansion of the report, NAB has added a new segment, which compares sales from domestic versus international online retailers. NORSI reports that despite negative numbers in mom terms, the dominant sales share is coming from domestic online retailers.
Source: NAB NORSI report February 2019.
NAB estimates that in the 12 months to February, Australians spent $28.92 billion on online retail, which is equivalent to nine per cent of of bricks-and-mortar retail, which totalled approximately $321.54 billion in the year to January 2019 according to the Australian Bureau of Statistics.