December slump has retailers on high alert
Monthly retail figures from the Australian Bureau of Statistics have shown a somewhat dismal December trading period performance, having fallen 0.4 per cent to $27 billion, compared to the 0.5 per cent increase seen in November.
While online retail turnover made up 5.6 per cent of the total figure, this figure fell from 6.6 per cent enjoyed in November, indicating the increasing importance of the pre-Christmas sales events such as Black Friday and Cyber Monday.
The results show that, over the course of the holiday period Australians spent $48.7 billion on retail sales, below the $51 billion projected by the Australian Retailers Association (ARA) and Roy Morgan, though above the corresponding turnover of $47.5 billion from 2017.
National Retail Association chief executive Dominique Lamb pointed out that these figures should serve as a warning, to both sides of the political landscape, that sectors of the retail industry are struggling.
“Retail is the second biggest sector in the Australian economy, so when it goes through a challenging period there is a knock-on effect throughout the economy,” Lamb said.
“While the retail community certainly doesn’t look to government for all the answers, it is during slow periods such as these that measures are required that assist small business.”
Household goods fell 2.8 per cent, and clothing and footwear saw a 2.4 per cent decline in spending over the month, while department store turnover decreased 1.1 per cent. However, cafes, restaurants and takeaway food services rose by 1.1 per cent over the month.
ARA executive director Russell Zimmerman pointed out that, while the monthly figures were depressed, annually the industry achieved a 3 per cent growth in sales, compared to the 2.76 per cent seen the previous year.
“Although these figures are disappointing, it is important to note that there are a variety of factors that have contributed to these soft figures, including the decrease in consumer sentiment caused by rising household costs and low wage growth, which continues to plague the industry and overall economy,” Zimmerman said.
These sentiments were echoed earlier in the month by NAB chief economist Alan Oster, who noted that these factors had led to consumers becoming reluctant to spend on non-essentials, having observed a 1.4 per cent decrease in online spending over the December period.
This article first appeared on Inside Retail, a sibling publication to Inside Franchise Business.