Sunday, February 25, 2024

Retail turnover falls in October

Consumers spent more than $35.7 billion across the country in October, according to seasonally adjusted figures released by the Australian Bureau of Statistics (ABS).

Australian retail turnover fell 0.2% in October, following rises of 0.9% in September and 0.2% in August. Year on year, retail sales increased 1.2%.

“Retail turnover fell in October after a short-lived boost in spending in September,” says ABS Head of Retail Statistics Ben Dorber.

“Turnover was down in all retail categories except food retailing.

“It looks like consumers hit the pause button on some discretionary spending in October, likely waiting to take advantage of discounts during Black Friday sales events in November. This is a pattern we have seen develop in recent years as Black Friday sales grow in popularity.”

In terms of retail turnover, food retailing (up 0.5%) was the only retail industry to record a rise in October.

Meanwhile, all non-food related retail industries fell, reversing last month’s rises. Clothing, footwear and personal accessory retailing (down 1%) recorded the largest fall of the non-food industries, followed by household goods retailing (down 0.6%), department stores (down 0.6%), and other retailing (down 0.4%).

Cafes, restaurants and takeaway food services (down 0.4%) recorded a second straight fall.

The most significant year-on-year sales increases, however, came from cafes, restaurants, and takeaway (up 4.6%) and food (up 3.3%).

Department stores (up 0.4%) and other retailing, including recreational, sporting goods, cosmetics (up 0.3%) recorded stable spending year-on-year, while clothing, footwear and accessories experienced decline (down 0.7%).

Household goods, again, recorded spending decline (down 4.6%), marking ten consecutive months of negative growth.

Spending on essentials

Australian Retailers Association (ARA) CEO Paul Zahra says the October results only remained positive due to consistent spending on essentials like food.

“Spending on essentials remains consistent, while discretionary goods categories are clearly taking a hit,” he says.

“Food and takeaway again led the spending growth, and this is consistent with what we’ve seen all year – shoppers are prioritising the essentials in a cost-of-living crisis.

“While spending on takeaway remains positive with shoppers opting for value options such as quick service restaurants to ease pressure on their budgets.

“Shoppers are increasingly feeling the crunch of the cost-of-living crisis and interest rate increases, making it a challenging time to be a discretionary retailer.

“October’s underwhelming results also came amid the Reserve Bank of Australia’s last interest rate pause. We expect retail sales will be impacted even more by November’s interest rate hike.”

State breakdown

Retail turnover growth was mixed across the country, with five states and territories recording a fall.

Victoria (down 0.8%), NSW (down 0.5%), and the ACT (down 0.5%) each recorded their first monthly fall in retail turnover since June 2023.

All states and territories, however, recorded growth year-on-year, led by Western Australia (up 3.5%), the ACT (up 3.2%), the Northern Territory (up 2.8%), South Australia (up 2.8%), Victoria (up 1.0%), Queensland (up 0.7%), Tasmania (up 0.7%) and NSW (up 0.1%).

Looking ahead

Mr Zahra says retailers will be watching for November’s retail trade results with interest, given the prevalence of this year’s Black Friday sales.

“Black Friday has been forecast to be record-breaking this year, with shoppers desperate to cross off their Christmas wish-lists during the biggest pre-Christmas sale event of the year, which is likely to impact December’s numbers,” he says.

“Retailers and Australians will be anxiously awaiting the RBA decision next week, which will affect the final few weeks of Christmas spending.

“While much has been said about the cost-of-living crisis, retailers are also experiencing a cost of doing business crisis and will be concentrating on offering the best service and value for budget conscious shoppers during the all-important Christmas trading period.”

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