Economy-wide spending softened in May according to the Commonwealth Bank Business Sales Indicator.
The monthly trend of spending growth fell to 0.3 per cent in May, down from 0.6 per cent in the month of April.
“While we have continued to see an overall lift in spending for fifteen consecutive months, in May growth slowed to the weakest trend pace for over a year,” CommSec chief economist Craig James said.
The drop in sales growth was attributed to reduced spending on transportation, amusement and entertainment (down 0.5 per cent), as well as a drop in spending at retail stores (down 0.3 per cent).
James noted the decreased spending was potentially the result of “higher petrol prices”.
The strongest growth occurred in Queensland (up 0.9 per cent), with Tasmania and South Australia following behind (up 0.7 per cent).
The ACT (up 0.6 per cent), Western Australia (up 0.5 per cent), Northern Territory (up 0.4 per cent) and Victoria (up 0.2 per cent) showed respectable growth, while NSW posted the only drop in overall sales (dropping 0.1 per cent).
Year-on-year, all states and territories posted sales increases.
Population growth good for retailers
Confidence remains high in Australia’s retail sector, however, with both investments and spending remaining robust.
The Colliers International H1 2018 Retail Research and Forecast Report found the retail property sector in Australia is performing well, being underpinned by above average population growth of 1.6 per cent per annum, particularly in Sydney and Melbourne.
This growth “has resulted in some developers focusing on developments with a combination of residential, retail and office which increase amenity, walkability and liveability,” said Kate Gray, director of research at Colliers International.
Retail spending has grown to just over 3 per cent in March year on year.
“As Amazon’s launch has proven thus far to be a blip on the retail radar, it has driven confidence in our market as to the continued relevance in bricks and mortar in retail strategy,” said Michael Bate, national director of retail at Colliers International.
“Retailers still cannot afford to be complacent, and must prioritise in-store experience and technological advancement in their strategy to remain a strong performer in this market.”
The report finds that click and collect is a major focus for grocery retailers, reporting growth three times faster than delivery sales.
“Whilst online sales are generally increasing in the fresh food market… landlords need to be increasingly considerate of the grab and go options with delivery mediums so that delivery riders and pick up points are not affecting the dining experience and bottle necking aspects retail centres,” said George Wragge, director of retail leasing at Colliers International.
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