Mixed news on the retail front

According to the ARA, retail sales continue to show robust year-on-year growth, with $35 billion spent in stores and online in October — an increase of 12.5 per cent on the same time a year ago.

However, the ABS also pointed out that retail turnover fell 0.2 per cent compared to the previous month, the first monthly fall of the year in retail trade.

Ben Dorber, ABS head of retail statistics, said the October fall in retail turnover ends a run of nine straight monthly rises and suggests increased cost-of-living pressures including interest rate rises have started to weigh on consumer spending.

“Turnover fell in all industries in October except for food retailing, which rose 0.4 per cent boosted by flood-related spending in parts of Australia and continued high food prices,” he said.

Department stores had the largest fall, down 2.4 per cent, followed by clothing, footwear, and personal accessory retailing, down 0.6 per cent.

Department stores fell for the second consecutive month, while clothing, footwear, and personal accessory retailing is down after a 2.0 per cent rise in September. Household goods retailing fell for the second consecutive month, down 0.5 per cent, the fifth fall in the last seven months.

Cafes, restaurants and takeaway food services recorded its first fall since January 2022, down 0.4 per cent and other retailing fell 0.2 per cent.

“Elevated post-lockdown demand and price increases had boosted sales throughout the year in cafes, restaurants and takeaway food services. A slowdown in growth in recent months, capped off by the fall in October, shows trading conditions continued to normalise,” Mr Dorber said.  

In comparison, the ARA report on October retail sales showed there were strong year-on-year sales increases for clothing, footwear, and personal accessories (up 32.8 per cent); cafés, restaurants, and takeaway food (up 35.3 per cent); and department stores (up 23.0 per cent).

ARA chief executive Paul Zahra said while the results remain solid for retail, some softening of sales is inevitable as Australians confront the cost-of-living challenges.

“October results remain strong when compared to the same period last year, and that is a remarkable result in the face of current challenges,” Mr Zahra said.

“We are optimistic about pre-Christmas trading, anticipating a $63.9 billion spend this year — up 3 per cent on 2021 spending according to our ARA-Roy Morgan predictions. However, it’s important to acknowledge that price increases are a factor in these numbers and are also driving Australians to spend to get in ahead of inflation. We haven’t yet seen the forecast inflationary peak, and we anticipate a softening of sales in 2023.

“Early indications of Black Friday/Cyber Monday sales points to being record-breaking based on foot traffic and anecdotal feedback however, these results could be due to delayed purchases and Christmas purchases brought forward. The success of this global event can only really be determined at the end of the all-important Christmas.

“The rising cost of doing business along with supply chain disruptions and staff shortages remain top of mind for retailers. We continue to engage with governments around short and long-term solutions to aid the retail industry’s permanent state of disruption.”