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Homewares and appliances help boost online retail sales for August

Online retail has rebounded after two weak months buoyed by growth in the homewares and appliances category.

The NAB Online Retail Sales Index data for all eight online retail categories in August showed growth in month-on-month terms.

The largest sales category was in homewares and appliances, 12.1 per cent month-on-month seasonally adjusted, bouncing back after two months of sales declines. The year-on-year change for homewares and appliances, however, remains slightly negative due to weakness in June and July.

Department stores sales were virtually flat.

Smaller spend share category, media, recorded the highest sales growth in the month, and is now slightly positive in year-on-year terms.

In year-on-year terms, the smallest sales category, takeaway food, recorded the fastest growth with sales almost double what they were in August 2018.

“Our NAB Online Retail Sales Index data indicates that sales growth rebounded strongly and returned to positive territory in August after two weak months prior,” said Alan Oster, NAB chief economist.

Oster said online sales tend to be more volatile than broader retail, experiencing far greater monthly fluctuations, but the past five months have been considerably more so. 

“Looking through the month-to-month volatility, sales growth in year-on-year terms returned to close to double digits and 12-months-to August growth remains strong,” he said. “The acceleration in sales growth does not appear to be borne out in the latest result for the broader cashless retail measure, which indicates that broader retail sales growth for August were more subdued when compared to online retail.”

Oster said the rebound in sales growth for the largest sales category, homewares and appliances, contributed significantly to the headline result. However, he said, this category has experienced periods of sales weakness over the past year, so much so, that its share of the online index has dropped from around 28 per cent a year ago to about 26.8 per cent now.

The mid-sized sales category of grocery and liquor continues to record far more stable growth.

“This category is currently ranked fourth in terms of monthly sales growth, a position where it has averaged over the past three years,” Oster said.

Oster said the smallest sales category, takeaway food, has been the most volatile in terms of sales growth, possibly due to structural changes by way of high profile exits and consolidation. Through this volatility, this category has almost doubled in sales compared to August 2018.

According to the NAB Online Retail Sales Index, domestic online retailers performed considerably stronger in month-on-month terms relative to international competitors at 6.2 per cent. Growth rebounded for domestic homeware and appliance retailers, which had felt the brunt of the recent slowdown.

Oster said international retailers grew at a relatively slower rate after outpacing domestic last month.

“The result was due to a particularly strong rebound in the key sales categories of homewares and appliances, and media.”

Of the large sales states, Victoria leads in year-on-year growth, while Tasmania recorded a considerably strong rebound after months of persistent weakness to lead monthly online sales growth in August.

“Online sales growth in Victoria on average has been higher than NSW over the past couple of years. Consequently, the gap in spend share between the two is narrowing,” Oster said.

Representing about one-third of all online sales, regional areas recorded the stronger growth in August relative to metropolitan regions.

“The large sales states of NSW, Victoria and Queensland were the key drivers of the strong regional result, while sales growth was stronger in metro areas in WA, SA and Tasmania,” Oster said.

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