Tuesday, June 18, 2024

Retail turnover boosted by sales events

Australian retail turnover increased 0.7% in May 2023, according to figures released by the Australian Bureau of Statistics (ABS). This follows a flat result in April 2023 and a 0.4% rise in March 2023.

ABS Head of Retail Statistics Ben Dorber says: “Retail turnover was supported by a rise in spending on food and eating out, combined with a boost in spending on discretionary goods.

“This latest rise reflected some resilience in spending with consumers taking advantage of larger than usual promotional activity and sales events for May.”

Other retailing recorded the largest growth (+2.2%), with turnover growing strongly across a variety of businesses, including online-only retailers, florists, and pharmaceutical and cosmetics retailers. An early start to some end of financial year sales events boosted turnover along with Mother’s Day and the ‘Click Frenzy Mayhem’ sales event.

“Just as we saw during the November Black Friday sales last year, consumers appeared to take extra advantage of discounting during large sales events in May in response to cost-of-living pressures,” Mr Dorber said.

Household goods retailing (+0.6%) had a modest rise following three straight monthly decline, with turnover down (-4.4%) since May 2022.

Clothing, footwear, and personal accessory retailing (-0.6%) and department stores (-0.5%) were the only retail categories to decline this month. This follows an increase in April when sales were boosted by increased spending on clothing items due to cooler and wetter than average weather.

For food-related industries, turnover increased in both cafes, restaurants and takeaway food services (+1.4%) and food retailing (+0.3%). The rise in May means that cafes, restaurants and takeaway food services turnover is again at a record level following last month’s small decline. Food retailing has recorded a monthly growth for 16 of the past 18 months.

“Most of the growth in food-related spending this year has been driven by rising prices. This was seen in yesterday’s release of the Monthly Consumer Price Index (CPI), which showed that food prices rose 7.9% in the 12 months to May. The largest contributor to this increase was from meals out and takeaway food, as businesses passed on their higher costs through price rises,” Mr Dorber said.

The most significant year-on-year sales increases were food spending (up 6.1%) and cafes, restaurants, and takeaway (up 12.7%).

Clothing, footwear, and accessories (up four per cent), department stores (up 3.4%) and other retailing (up 2.2%) showed modest growth, attributed largely to cooler than average weather, and early promotional activity.

Household goods declined year-on-year by 4.4%, marking six months of negative sales growth.

All states and territories recorded growth year-on-year, led by ACT (up nine per cent) followed by South Australia (up 6.5%), WA (up 5.7%), NT (up 5,2%), Victoria (up 4.7%), NSW (up 4.2%), Queensland (up 1.8%) and Tasmania (up 1.6%).

May retail sales record 4.2% year-on-year growth

Shoppers spent more than $35.5 billion across the country in May, with retail sales recording recorded 4.2% year-on-year growth – bolstered by food, cafes, restaurants, and takeaway however, discretionary spending continues to soften.

Australian Retailers Association (ARA) CEO Paul Zahra says sales growth for essentials like food is largely attributable to inflationary price increases.

“Food, dining out and takeaway are still predominantly driving overall retail sales growth and unavoidable price increases are a significant factor for those businesses,” Mr Zahra said.

“We’ve now seen six months of spending decline on household goods, and we expect this will be a bellwether for most consumer spending in the months ahead.

“It’s important to remember that cost-of-living pressures typically have a lag effect on retail – which is why we’re seeing a gradual softening in spending.

“Clothing and department stores are still showing modest growth, but this is mostly drive by early promotional activity and cooler than average temperatures.”

Mr Zahra reiterated that cost-of-living pressures, and a cost-of-doing-business crisis, remains the greatest concern for retailers.

“While we’re seeing a softening in spending, retailers are simultaneously feeling the pressure from increasing operating costs across the board. We are now experiencing a collision between the cost-of-living crisis and a cost-of-doing business crisis.”

 

CATEGORY

MAY 2022 MAY 2023 CHANGE
Food $13.205 billion $14.004 billion +6.1%
Household goods $6.032 billion $5.764 billion -4.4%
Clothing, footwear, accessories $2.874 billion $2.990 billion +4.0%
Department stores $1.845 billion $1.907 billion +3.4%
Cafes, restaurants, takeaway $4.770 billion $5.375 billion +12.7%
Other $5.359 billion $5.481 billion +2.2%
Total $34.087 billion $35.524 billion +4.2%

 

STATE MAY 2022 MAY 2023 CHANGE
New South Wales $10.716 billion $11.169 billion +4.2%
Victoria $8.748 billion $9.165 billion +4.7%
Queensland $7.106 billion $7.235 billion +1.8%
South Australia $2.153 billion $2.294 billion +6.5%
Western Australia $3.753 billion $3.968 billion +5.7%
Tasmania $684 million $695 million +1.6%
Northern Territory $304 million $320 million +5.2%
ACT $619 million $675 million +9.0%
Total $34.087 billion $35.524 billion +4.2%

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