Friday, July 26, 2024

Retail sales fall in December

Consumers spent $35.1 billion across the country in December, according to figures released by the Australian Bureau of Statistics (ABS).

Australian retail turnover fell 2.7%, following a rise of 1.6% in November and a fall of 0.2% in October. Year on year, retail sales increased a modest 0.8%.

“The large fall in retail turnover in December was caused by a fall in discretionary spending. Consumers brought forward some of their usual December spending to November to take advantage of Black Friday sales,” says ABS Head of Retail Statistics Ben Dorber.

“This shift in spending from December to November reflects the growing popularity of Black Friday sales and the impact of cost-of-living pressures, with consumers seeking out bargains and taking advantage of discounts in November.

“While there was a large seasonally adjusted fall in December, retail turnover rose 0.1% in trend terms. This shows that underlying retail spending remains subdued when we look through the volatile movements over recent months in the lead up to Christmas.”

For food-related industries, turnover fell in cafes, restaurants and takeaway food services (down 1.1%), while food retailing (up 0.1%) was the only industry to rise.

Turnover fell in all the non-food industries that had been boosted by Black Friday sales in November. Household goods retailing (down 8.5%) had the largest fall, following the largest rise last month. The next biggest drops were in department stores (down 8.1%), clothing footwear and personal accessory retailing (down 5.7%), and other retailing (down 1.1%).

“Retailers told us that trading conditions were slow in early December following the success of Black Friday before picking up again in the lead up to Christmas and Boxing Day sales where discounting activity returned,” says Mr Dorber.

Year on year growth

Year on year, most categories recorded growth, with the most significant increases in department stores (up 3.7%).

Other retailing (up 1.7%), cafes, restaurants, and takeaway (up 1.6%) and food (up 1.4%) also saw modest growth.

Clothing, footwear and accessories (up 0.5%) recorded a slight increase while household goods saw sales decline (down 3.2%).

Most states and territories recorded growth year-on-year, led by Tasmania (up 3.1%), Western Australia (up 2.4%), the Northern Territory (up 2.2%), the ACT (up 2.1%), South Australia (up 1.5%), Queensland and Victoria (both 1.1%). NSW recorded a spending decline of 0.6%.

Australian Retailers Association CEO Paul Zahra says December’s results reflected projections that 2023’s Christmas spending would tread water as shoppers tighten their budgets.

“Throughout Christmas and the Boxing Day sales, we saw bargain-driven shoppers, who actively sought out the best deals and looked for value purchases,” he says.

“With household budgets under pressure, Christmas in 2023 was somewhat subdued compared to previous years – a result of cost-of-living challenges. We aren’t seeing the year-on-year growth that we did in previous years.

“The rising popularity of Black Friday also impacted December’s trading, with many Australians opting to purchase their Christmas gifts earlier during the major sales event in November.

“Department stores fared particularly well, capitalising on the Boxing Day sales and the final few weeks before Christmas with a range of promotional events.

“With high interest rates and increasing costs for families, we’re continuing to see a softening in discretionary spending.”

Looking ahead

Mr Zahra says next week’s decision by the Reserve Bank of Australia will have significant bearing on the trading months ahead.

“We’ve seen reduced spending growth in December,” he says. “Another interest rate increase would be crushing for retailers.”

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