Retail report: Department stores still shining

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Inside Franchise Business: Retail report: Department stores still shiningOnline retail spending has seen strong growth in June, according to Commonwealth Bank’s recently released Business Sales Indicator (BSI).

Spending at clothing stores has also risen for five successive months, CommSec senior economist Ryan Felsman said.

“Web-based retailers such as The Iconic, Kogan, Catch and OzSale have penetrated the market,” Felsman said. “And catalogue vending remains popular with Aussies. Retailers such as Bunnings, Ikea, Coles, Woolworths, Aldi and Chemist Warehouse and EziBuy, enable shoppers to buy in store, or via the phone, or online.”

Felsman also said strong e-commerce growth and the Aussies’ love affair with catalogues as media for selection is contributing to aggressive price discounting, which is pushing down goods prices and pressuring the margins of bricks and mortar retailers.

According to Felsman, the latest BSI, a measure of economy-wide spending, showed continued momentum in sales at clothing stores in June, up 0.7 per cent for a second consecutive month.

He said the late arrival of winter has left many Australians decidedly chilly, but it’s been good news for clothing retailers.

“Shoppers have been flocking to stores to buy apparel as the colder weather finally arrived across the country,” Felsman said.

He added that consumer purchases of apparel, garments and footwear were benign over the Christmas and New Year trading period but spending at clothing stores has now risen for five successive months.

Spending on mail and telephone orders, including internet purchases, also continued to lift in June, up by 3.2 per cent.

“The lift in orders, which includes online buying, appears to coincide with Amazon’s arrival in Australia late last year,” Felsman said. “But catalogue-related purchasing remain popular with shoppers.”

Automotive and vehicles sales were also up in June, by 1.0 per cent.

“SUV car sales in Australia are at record high levels, reflecting a shift in preferences from passenger vehicles to utes and other recreational vehicles,” Felsman said.

He added that overall, the BSI posted the slowest growth in 15 months, up 0.2 per cent in trend terms.

“While sales in 16 of the 19 industry sectors rose in trend terms, on the other side of the equation sales fell for retail stores (outside of clothing and apparel specialists) and government services (both down 1.0 per cent), followed by transportation (down 0.5 per cent).”

 

This article first appeared in Inside Retail, a sibling publication to Inside Franchise Business.

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