“Jarring” January for retailers
A continuation of difficult trading conditions in the clothing, footwear, personal accessories and department store categories has constrained retail spending growth in January to 0.1 per cent, according to the latest data from the Australian Bureau of Statistics.
Year-on-year turnover growth slowed to 2.09 per cent, following a 2.97 per cent rise last month.
Despite a turnaround from the 0.5 per cent month-on-month decline recorded in December, the January figures were below market expectations of a 0.3 – 0.4 per cent rebound.
Headwinds compounded for the clothing, footwear and personal accessories category in January, with seasonally adjusted turnover decreasing by 0.7 per cent for the month, growing by .43 per cent year-on-year.
Department stores turnover decreased 0.6 per cent in January and by 0.94 per cent year-on-year.
This contraction offset modest growth the other retailing category, up 1 per cent for the month and by 0.05 per 3.22 year-on-year.
Household goods was relatively flat, increasing by 0.1 per cent on a seasonally adjusted basis and growing by 1.38 per cent year-on-year.
Food retailing was flat, up 0.01 per cent for the month, growing by 2.56 per cent year-on-year.
Cafes restaurants and takeaway foods services was also flat, up 0.05 per cent in January, growing by 2.75 per cent year-on-year.
Online retail sales increased by 3.23 per cent year-on-year.
A “disappointing” result
The underlying trend picture, which irons out monthly volatility, was slightly more positive, rising 0.3 per cent – but CBA senior economist John Peters said a sustained pick-up is “some way off”.
“This modestly more positive underlying picture still is far from signposting any sustained pickup in retail spending activity by consumers soon,” he said.
“It really should be no surprise to observe such ongoing underlying weak retail trade outcomes given that broad based wages growth is at its most measly in decades.”
The Australian Retailers Association’s executive director Russell Zimmerman described the result as “jarring”.
“Quite frankly this is very concerning,” he said. “Consumers are very concerned about cost increases.”
Zimmerman said that he hasn’t seen any evidence things are about to get better for the sector, and that the current conditions are likely not cyclical.
“I’m not confident of seeing an increase at this stage, I’d like to, but everything that we’re seeing at the moment doesn’t indicate that.”
In the last week online grocery business Aussie Farmers Direct has fallen into administration, and food-chain Doughnut Time has flagged its intention to consolidate its business.
This comes after the collapse of boutique brand Zachary last week, and the administration of Kangaroo Tent City & BBQ as well as The Outdoor Furniture Specialists last month.
NRA CEO Dominique Lamb said January was “sluggish” for the sector, but that the figures aren’t cause for panic.
“Today’s figures are not cause for panic, but they do show that retail is experiencing a sluggish start to 2018 and it is therefore vital that measures are in place over the coming months that are conducive to strong retail sales,” she said.
Across the country Queensland was the top monthly performer, with sales up .42 per cent, while year-on-year Victoria saw the largest pick-up, increasing by 3.85 per cent.
NSW recorded a 0.61 per cent decline in spending monthly, growing by 1.84 per cent year-on-year.
On Tuesday, the Reserve Bank of Australia left the cash rate unchanged at 1.5 per cent as it forecast stronger economic growth in 2018 and a gradual rise in inflation.
The RBA board’s decision means its official interest rate has been at a record low for 19 months.
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