Subdued retail spending in September

Consumers spent $36.45 billion across the country in September, according to figures released by the Australian Bureau of Statistics (ABS).

Australian retail turnover rose 0.1%, following a rise of 0.7% in August and a flat result in July. Year on year, retail sales increased 2.3%.

“After a boost last month from warmer-than-usual weather, retail spending held firm in September,” says ABS Head of Business Statistics Robert Ewing.

Turnover results were mixed across the industries.

Household goods retailing (up 0.5%) had the largest rise, having been the only industry to fall in August (down 0.4%).

“The rise in household goods was led by Western Australian spending on hardware and gardening items after unseasonal rainfall last month reduced sales,” says Mr Ewing.

Cafes, restaurants and takeaway food services (up 0.4%) was the only other industry to rise in September.

Department stores (down 0.5%), clothing, footwear and personal accessory retailing (down 0.1%) and food retailing (down 0.1%) all had small falls following rises in August.

“The August boost in spending on alcohol was temporary, with a sharp reversal in liquor retailing this month driving the fall in food spending,” says Mr Ewing.

Other retailing remained unchanged (0.0%).

Year on year sales

Other retailing saw the strongest growth in September (up 5.2 % year-on-year) along with the staple category of food (up 3.1%).

Cafes, restaurants and takeaway services rose (up 1.4%) year on year.

Clothing, footwear and accessories showed marginal growth (up 0.8%), as did household goods (up 0.03%) while department stores recorded a slight decline (down 0.2%).

Australian Retailers Association CEO Paul Zahra says that while the modest growth is welcomed, retailers continue to face challenging economic headwinds.

“We are calling on the Reserve Bank of Australia to provide a cash-rate cut when it meets [this] week. This decision would give confidence to the retail sector in the lead-up to the all-important peak Christmas season where many discretionary retailers make up to two-thirds of their profits,” he says.

“Interest rates and cost-of-living pressures continue to impact Australians which is resulting in slowed consumer spending in most categories.

“There is some buoyancy in the cosmetics, sports and recreational goods category which show us the ‘lipstick effect’ in action – with Australians continuing to spend on little personal luxuries versus larger purchases.

“While there is great resilience within the industry, we know many retail businesses in the sector are doing it tough, especially small businesses.

“Retailers employ thousands of additional people during the all-important Christmas trading period, providing jobs and supporting the Australian economy.”

Looking ahead

Mr Zahra says that retailers have their sights firmly set on the peak season, including Black Friday and Cyber Monday, and the all-important Christmas and holiday period.

“Retailers are gearing up for peak season, with Christmas in full swing, with most consumers having already commenced Christmas shopping to spread out purchases,” he says.

“We know this year, more people will be shopping even earlier, planning to complete their gift purchases at the legendary Black Friday and Cyber Monday period – which is why many retailers are eagerly anticipating the back end of next month.

“This remains one of retail’s most challenging years – with a continued slowdown in discretionary spend, high business costs along with ongoing challenges such as retail crime, supply chain disruptions, and the most significant workplace relations reforms in decades.”