October surges year on year as retailers prepare for a robust Christmas

Today’s preliminary ABS retail trade data for October reveals an increase of 7.3% on October 2019, amid predictions of a robust Christmas sales period by the Australian Retailers Association (ARA).

ARA CEO Paul Zahra said he expects some retail categories and locations will continue to fare better than others as we head into the heart of Christmas trading.

According to the ABS, by industry, cafes, restaurants and takeaway food services led the month on month rises in October, while there were also rises in clothing, footwear and personal accessory retailing, other retailing, and department stores.

“It’s encouraging to see strong overall retail growth of 7.3% year-on-year, underpinned by continued strong sales in household goods and food,” Mr Zahra said. “The monthly elevation of discretionary categories is also heartening to see, with these areas most negatively affected by pandemic spending patterns across 2020,” said Mr Zahra.

“Unsurprisingly, Victoria continued to drag down the national average, falling 5.7% year-on-year after a hard lockdown spanning most of October, though a monthly increase was a promising sign of a return to spending upon reopening. Our eyes are firmly on the Christmas trading period, as we hope for a release of pent-up demand.

“Whilst all indications are that South Australia’s lockdown will be brief, with retailers making up to two-thirds of their revenue during the critical summer trading period, every backward step during this time has significant impact. We remain of the view that lockdowns are a measure of last resort, as identified by the World Health Organization, and are keen to see a consistent hotspot approach, similar to that successfully implemented in NSW, adopted nationally to help support business and consumer certainty,” he said.

“We remain optimistic around results for the Christmas trading period, with ARA / Roy Morgan research predicting overall retail sales growth of 2.8% nationally across the November and December period. Sales performance is likely to be polarised, with 39% of retailers expecting Christmas sales to exceed 2019 by more than 5%, while 24% expect sales to decline by more than 5% according to the Deloitte Retailers’ Christmas Survey.

“The big shift towards online continues, with 71% of retailers surveyed by Deloitte identifying that online sales are expected to exceed the same period last year. With convenient new options like click-and-collect, and better home deliveries this Christmas, customers will be spoiled by options in how they shop.

“Retailers are safe and prepared, and ready for shoppers to return for a Christmas like no other. Every dollar spent is a dollar towards supporting a job, a struggling business, and a retail recovery that is critical to our wider economic recovery.

“We can be enormously proud of the way retail has adapted to an incredibly difficult year, and we hope that, together with all Australians, the retail industry can finish on a high with a safe and joyful Christmas shopping season,” Mr Zahra concluded.

Key Statistics: ABS Preliminary Retail Trade, Oct 2020

Oct MoM: +1.6% Oct YoY: +7.3% (+11.9% excluding Victoria

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