Demand set to fuel spending through Christmas

“The retail recovery is underway in NSW and the ACT, which emerged from lockdowns in recent weeks. We’re seeing a lot of pent-up demand in those locations with people getting back out and about, enjoying their freedoms,” said Australian Retailers Association chief executive Paul Zahra said.

Australian retail sales increased 1.7 per cent in September compared to the same time last year, and increased 1.3 per cent compared to the previous month, according to figures released last Friday (October 29) by the Australian Bureau of Statistics.

“While the ABS figures are looking back at a lockdown month, retailers have got their sights firmly set on Christmas, which is a time when many discretionary retailers make up to two thirds of their profits,” Mr Zahra said.

“Not surprisingly, there were sharp declines in September compared to 12 months ago for department stores and clothing, footwear and personal accessories – these are businesses that have been significantly impacted by the lockdowns, but are now looking forward to making up for the substantial trading losses they’ve incurred in recent months over the festive period.

“Our research in conjunction with Roy Morgan shows Australians are forecast to spend nearly $59 billion in the pre-Christmas sales period, which is in line with last year’s spend, but well up on pre-pandemic conditions. The overall trend is looking positive with retailers looking to cash in on the pent-up demand that exists across the economy.”

Despite the uplift, discretionary retail results reflected the impact of extended lockdowns. Department stores and clothing, footwear and personal accessories recorded the sharpest year-on-year falls out of the retail categories (down 16.9 per cent and 11.4 per cent respectively), however there were modest year-on-year increases for food retailing, household goods and cafes, restaurants and takeaways.

Out of the states and territories, the ACT recorded the sharpest decline in retail sales for September compared to the same month last year – down 26.2 per cent. NSW, which was also battling through a lockdown in September, recorded a year-on-year drop of 8.9 per cent. Victoria – also locked down – recorded a 12.9 per cent increase in sales. However, the Victorian result reflects the state’s 2020, 100+-day lockdown.