Tuesday, June 18, 2024

Retail turnover up 0.5% in July

Australian retail turnover increased 0.5% in July 2023 (seasonally adjusted), according to figures released by the Australian Bureau of Statistics (ABS).

ABS Head of Retail Statistics Ben Dorber says: “The rise in July is a partial reversal of last month’s sharp decline in turnover. This was after weaker-than-usual end of financial year sales.”

The increase in July follows a 0.8% decline in June 2023 and a 0.8% increase in May 2023.

“While there was a rise in July, underlying growth in retail turnover remained subdued. In trend terms, retail turnover was unchanged in July and up only 1.9% compared to July 2022, despite considerable price growth over the year,” Mr Dorber said.

Most non-food industries increased in July, following larger decline in June. Department stores (+3.6%) recorded the largest increase, followed by clothing, footwear and personal accessory retailing (+2.0%), and other retailing (+0.3%). Household goods retailing recorded a second consecutive fall (-0.2%), the eighth monthly decline in turnover in the past 12 months.

Food-related spending was mixed, with an increase in cafes, restaurants and takeaway food services (+1.3%) while food retailing remained unchanged.

“Cafes, restaurants and takeaway food services turnover grew considerably, despite an overall slowing down in food-related spending in recent months,” Mr Dorber said.

“The rise in July was boosted by additional spending at catering and takeaway food outlets linked to the 2023 FIFA Women’s World Cup and school holidays.”

July retail sales record 2.1% year-on-year growth, but most categories remain in decline

Retail sales increased just 2.1% year-on-year in July with food and cafes, restaurants and takeaway again bolstering overall retail activity.

According to the ABS, shoppers spent more than $35.3 billion across the country in July.

The most significant year-on-year sales increases came from food spending (up 4.9%) and cafes, restaurants, and takeaway (up 9.0%).

All other categories recorded negative sales growth for the second consecutive month, with household goods again recording the biggest decline (down 4.9%), clothing, footwear and accessories (down 0.3%) and Department stores (down 0.05%).

All states and territories recorded growth year-on-year, led by ACT (up 6.1%) followed by South Australia (up 4.1%), Western Australia (up 3.5%), Northern Territory (up 3.5%), Victoria (up 2.4%), New South Wales (up 1.6%), Tasmania (up 0.8%) and Queensland (up 0.7%).

Australian Retailers Association (ARA) CEO Paul Zahra says sales growth overall continued, due to consistent spending on essentials like food albeit, mainly driven by unavoidable price increases.

“Retail sales data is showing a clear delineation between spending on essentials and discretionary goods, with food continuing to record growth mainly due to unavoidable price increases while other categories remained in decline,” Mr Zahra said.

“While spending on takeaway continues to be reasonable – shoppers are likely opting for value options such as quick service restaurants to ease pressure on their budgets.

“Shoppers are becoming increasingly conscious of cutting back on spending, making it a challenging time to be a discretionary retailer,” he said.

“Fashion retailers held quite significant sales events this year to clear winter inventory and in a bid to entice bargain-savvy shoppers.”

 

CATEGORY

JULY 2022 JULY 2023 CHANGE
Food $13.352 billion $14.010 billion +4.9%
Household goods $5.998 billion $5.752 billion -4.1%
Clothing, footwear, accessories $2.969 billion $2.958 billion -0.3%
Department stores $1.871 billion $1.870 billion -0.05%
Cafes, restaurants, takeaway $4.969 billion $5.417 billion +9.0%
Other $5.487 billion $5.373 billion -2.0%
Total $34.647 billion $35.383 billion +2.1%

 

STATE JULY 2022 JULY 2023 CHANGE
New South Wales $10.916 billion $11.094 billion +1.6%
Victoria $8.896 billion $9.117 billion +2.4%
Queensland $7.181 billion $7.233 billion +0.7%
South Australia $2.191 billion $2.282 billion +4.1%
Western Australia $3.830 billion $3.967 billion +3.5%
Tasmania $688 million $694 million +0.8%
Northern Territory $310 million $321 million +3.5%
ACT $632 million $671 million +6.1%
Total $34.647 billion $35.383 billion +2.1%

 

CreditorWatch Economist Anneke Thompson comments, “Today’s retail trade figures revealed a small increase in spending of the month of July, predominately in the Goods sector.

“However, this follows negative growth in June 2023, and in year on year terms, seasonally adjusted retail trade grew by just 2.1%, versus 2.3% in June 2023. Retail turnover is now growing more slowly than in 2019, the last year for pre-Covid data, and also a time when pricing growth was very subdued,” she said.

The department store category recorded the highest monthly growth, at 3.6%. “Some of the larger Discount Department Stores (DDS) such as Big W, did report in their annual earnings calls that they are noticing a trend of new consumers shopping in their stores, as they down-shift to a cheaper product. Household goods spending within DDS’ is still very subdued, but health and beauty is showing resilience,” Ms Thompson said.

Interestingly, food retailing was flat, which may be as a result of some pricing moderation in the fresh food category.

“In terms of payment arrears by industry, Accommodation, Food and Beverage Services and Retail Trade both sit in the top five for late payments,” Ms Thompson said. “These industries are reporting that 8.3% and 8.0% of invoices (respectively) due to small businesses are more than 60 days overdue. This is particularly problematic for businesses in these sectors, as rent as a proportion of their operating expenses is typically quite high, and late payments impact their ability to pay their own invoices on time. Further weakness in retail spending, which is highly likely given the prevailing high interest rate environment, is going to add further pressure to retailers, and result in increasing failure rates going forward.”

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