Online Retail Growth Slows in March, but Fashion and International Brands Fuel Resilience
27min read Australia’s online retail sector faced a deceleration in March 2025, with month-on-month growth easing to 0.4% from February’s revised 1.4%, yet year-on-year momentum remains robust at 13.7%. The National Australia Bank (NAB) Online Retail Sales Index reveals a nuanced picture: while some categories and regions faltered, fashion’s dominance and the influence of international retailers underscored resilience in an uneven market.
Category Dynamics: Fashion Drives Growth, Groceries Lag
The fashion sector emerged as the star performer, surging 3.2% month-on-month—a stark contrast to the broader retail fashion category’s 0.5% growth. Year-on-year, fashion’s expansion accelerated, driven by international brands catering to global trends. Homewares, appliances, and recreational goods also showed strength, while groceries and takeaway food sales contracted in March. This divergence highlights shifting consumer priorities: spending on discretionary items like apparel and home upgrades outpaced essentials.
The contraction in groceries and takeaway food contrasts with broader retail food categories, suggesting online grocers face steeper competition or logistical challenges. NAB’s Chief Economist Sally Auld noted that international retailers are disproportionately driving online growth, particularly in fashion—a trend that may pressure domestic players to innovate or risk losing market share.
Regional Performance: Metro Areas Outpace Regions
Online retail growth was uneven across states, with New South Wales (NSW) and Victoria (VIC)—Australia’s largest retail markets—slowing in March. Queensland (QLD) and South Australia (SA) recorded declines, while Western Australia (WA) rebounded after February’s dip. The Northern Territory (NT) stood out, fueled by surging homewares and appliance sales.
Year-on-year, metro areas saw accelerated growth, driven by NSW, VIC, and WA. Regional areas, particularly in QLD, lagged, reflecting disparities in infrastructure, consumer spending power, or preference for physical stores. This urban-rural divide could signal opportunities for logistics-focused investments or retailers targeting underserved regional markets.
Retailer Type: International Brands Outpace Domestic Peers
Both international and domestic retailers slowed month-on-month, but global players maintained stronger momentum. Year-on-year, international retailers outperformed domestic peers by a wider margin, leveraging scale and trend-driven product offerings. This dynamic raises questions about the long-term viability of smaller local brands unless they adopt agile e-commerce strategies or niche positioning.
Investors should monitor companies like Harvey Norman (homewares) and Myer (fashion) to assess their adaptability to global competition. Meanwhile, fintechs like Afterpay, which enable seamless online payments, may benefit from sustained e-commerce activity.
The Big Picture: Online Retail’s Share of the Market
Australians spent an estimated $61.87 billion online in the 12 months to March 2025, representing 14.1% of total retail trade—a record high. Annual growth of 10.9% signals a structural shift toward digital consumption, even as short-term volatility persists.
Sally Auld emphasized that online retail outperformed traditional retail in 8 of the past 12 months, a testament to its enduring appeal. However, the March slowdown hints at challenges: consumer caution, supply chain bottlenecks, or seasonal factors like weather-driven demand (as seen in UK homeware sales) may have influenced spending patterns.
Conclusion: Navigate the Nuances, Invest in Winners
The March data underscores that online retail’s growth is no longer uniform. Investors should focus on:
1. Fashion and lifestyle brands with global reach or unique offerings to capitalize on discretionary spending.
2. Logistics and infrastructure supporting metro and regional delivery networks.
3. Payment platforms enabling frictionless transactions.
While online’s 14.1% share of total retail is impressive, the contraction in groceries and regional areas signals risks in overexposure to saturated markets. Companies like ASX-listed Wisetech Global (logistics software) or Reckon (retail management tools) could benefit from sector fragmentation.
The key takeaway? Online retail’s growth may be moderating, but its trajectory remains upward. Investors who bet on categories and companies that align with evolving consumer preferences—and the global brands fueling them—will likely thrive in this evolving landscape.
As the data shows, online’s outperformance is a trend, not a blip. The question is no longer if to invest in e-commerce, but where.
