Strong retail sales in the ABS Preliminary Retail Trade Figures for June confirm a promising re-start for retailers around the country however, must be viewed in light of the pending impact of severe Victorian lockdowns, and the effect of stimulus spending the Australian Retailers Association (ARA) said today.
The data released today shows a 2.7% lift in retail turnover from May to June 2020, with turnover increasing 8.5% in June 2020 compared with the same period last year.
The data also confirms that online sales remain elevated, comprising almost 10% (9.7 per cent) of total retail sales in June compared to 6.1 per cent in June 2019.
ARA CEO Paul Zahra said June numbers capture a clear month of retail activity following the national lockdowns, but the data excludes the impact of new restrictions introduced in July and August.
“While figures show a healthy appetite for spending when restrictions are lifted, we can’t read too much into the June data – the economic situation has changed dramatically in recent weeks.
“The severity of the blow in Victoria is likely to be felt across state boundaries, putting the brakes on a national recovery. Non-essential retailers will suffer a financial loss from physical store operations In Victoria, though this will be somewhat cushioned by the ability to continue online sales and national distribution which are areas the ARA has strongly advocated for,” Mr Zahra said.
Mr Zahra said the data confirms ARA projections that online retail would continue to grow significantly through the Covid period.
“If there’s a silver lining to the otherwise tough trading conditions this year, it is the consistent growth in online trading which we expect to shift from 10 per cent to 20 per cent over the coming two years. Omnichannel retail operations are a critical growth tool for retailers and during Covid restrictions provide an important hedge against the closure of physical stores,” Mr Zahra said.
Discretionary retail remains challenged
Mr Zahra said there are deep concerns around the performance of the discretionary retail sector particularly those selling clothing, footwear and personal accessories continuing to face difficult conditions.
Despite the promising signs of June, discretionary sales remain down year-on-year despite sales discounts and strong availability of stock following previous store closures.
“The October to December quarter will be make or break for many retailers, as the sector still faces significant headwinds. Despite strong overall figures, the clothing, footwear, and personal accessories category still failed to match sales figures for the same period last year, which points to a two-speed economic recovery when it does arrive.
“We are bracing for a difficult set of figures over July and August after we begin to see the impacts of Victorian restrictions, and urge the other states to remain vigilant and maintain a safety-first approach to keep their economies open.
“Everybody in the community needs to play their part – both in Victoria and around the country – as the retail industry can’t afford another false start,” Mr Zahra concluded.
Monthly Retail Growth (May 2020 – June 2020, seasonally adjusted)
Department stores (-12.1%), Food retailing (0.9%), Household goods retailing (-3.3%), Cafés, restaurants and takeaway food services (27.9%), Other retailing (0.3%), and Clothing, footwear and personal accessory retailing (20.5%).
Western Australia (2.5%), Australian Capital Territory (3.8%), Queensland (0.4%), Victoria (4.1%), South Australia (1.3%), Tasmania (4.0%), New South Wales (3.7%), and Northern Territory (-4.9%).
Overall month-on-month sales growth: 2.7%.
Year-on-Year Retail Growth (June 2019 – June 2020, seasonally adjusted)
Food retailing (14.0%), Cafés, restaurants and takeaway food services (-16.6%), Other retailing (9.6%), Household goods retailing (24.5%), and Department stores (0.2%), and Clothing, footwear and personal accessory retailing (-4.2%).
Tasmania (13.8%), Queensland (11.1%), Victoria (5.0%), Western Australia (15.0%), Australian Capital Territory (9.1%), South Australia (10.1%), Northern Territory (6.0%), and New South Wales (7.1%).
Overall year-on-year sales growth: 8.5%.