Monday, April 22, 2024

Small growth in February retail sales

Consumers spent $35.8 billion across the country in February, according to figures released by the Australian Bureau of Statistics (ABS).

Australian retail turnover rose 0.3%, following a rise of 1.1% in January and a fall of 2.1% in December. Year on year, retail sales increased 1.6%.

“Seven sold-out Taylor Swift concerts in Sydney and Melbourne boosted retail spending [in February], with over 600,000 Swifties flocking to these events. This led to increased spending on clothing, merchandise, accessories and dining out,” says ABS Head of Retail Statistics Ben Dorber.

“Looking past the temporary and one-off impact of the Taylor Swift concerts, underlying growth in retail turnover was up only 0.1% in trend terms. After a period of higher volatility from November through to January, underlying spending has stagnated.”

Clothing, footwear and personal accessory retailing (up 4.2%) and department stores (up 2.3%) saw the largest industry rises in February.

Cafes, restaurants and takeaway food services (up 0.5%) had a more modest rise in February. This followed a 1.4% rise in January, which was boosted by large sporting events.

“Another rise in turnover for catering services, cafes, restaurants and takeaway businesses showed that consumers are still prepared to spend at large social events as seen [in January] with the big crowds at the tennis and cricket,” says Mr Dorber.

Turnover fell in household goods retailing (down 0.8%), other retailing (down 0.4%) and food retailing (down 0.1%), which reflected weaker underlying retail spending.

Year on year sales

Clothing, footwear and accessories saw the strongest growth in February (up 4%), followed by department stores (up 3.7%), cafes, restaurants and takeaway (up 2.9%) and other retailing (up 2.7%).

Food trading saw modest growth (up 1.6%), while household goods again slumped into decline (down 2.2%).

Australian Retailers Association (ARA) CEO Paul Zahra says while the pattern of low growth is concerning for retailers as they battle the increased cost of doing business, February’s retail sales results are in line with expectations.

“Australians are still cutting back on spending as the lag effect of interest rate rises continues to take hold. While food spending remained constant, there has been a shift towards more affordable and value-oriented products in recent months,” he says.

“The ongoing cost-of-living pressures and interest rate ramifications are making it a challenging period for those in the discretionary retail sector.

“Any growth that has been achieved is mostly being fuelled by the Australian population increases of 2.5% across the past year. We also understand that significant events like Taylor Swift concerts can go some way to stimulate spending.”

Looking ahead

The ARA welcomed the Reserve Bank of Australia’s latest decision to hold the cash rate in March and is hopeful the RBA may be on trajectory to cut rates from around mid-year.

“With inflation decreasing and retail expenditures weakening, a mid-year interest rate cut would certainly alleviate the pressure on the retail industry and Australian households,” says Mr Zahra.

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