Consumers spent $34.2 billion in stores and online in May, setting another retail record according to figures from the Australian Bureau of Statistics.
The data for retail spending in May showed a 10.4 per cent increase over 12 months and 0.9 per cent increase for the month.
However, both the National Retail Association (NRA) and Australian Retailers Association (ARA) concede that while sales are strong, the growth also reflects higher consumer prices due to inflation.
“It’s pleasing to see retail sales maintaining their strong trajectory, however, the figures aren’t necessarily a true reflection of how the sector is performing in an inflationary landscape,” says ARA CEO, Paul Zahra.
“The high sales volumes can be partially attributed to the higher consumer prices we’re seeing across the economy. Whilst sales are elevated, business costs are increasing enormously, in many areas at a far higher rate.”
NRA chief executive, Dominique Lamb, adds that small businesses need to see more support from the government that promotes spending.
“Some will feel the pain from the recent rate hike more sharply than others and some will struggle to pay the additional superannuation and minimum wage rise coming into effect,” she says.
“Decision makers need to be aware that there are thousands of small businesses who are still doing it tough, even though some states and some sectors are thriving.”
Indeed, performance across states and territories was mixed, with New South Wales recording the largest increase in turnover (1.6 per cent) and Queensland recording the lowest fall in turnover (0.4 per cent). Also, five out six sub-sectors recorded growth, with the exception of discretionary spending in the clothing, footwear and accessories sector falling 1.4 per cent.
“Despite cost of living and interest rates rises, consumers are still spending necessary items across food, department stores and household goods,” she adds.
“But we are seeing less spent on personal items as consumers grapple with the state of the economy.”
Zahra agrees, saying that when people rein in spending, discretionary purchases are some of the first things they cut. Leasing costs are going up for many businesses along with fuel and energy, while supply chains continue to be constrained, he adds.
“There’s been no let up to the disruption since Covid hit; things have only intensified since the war in Ukraine and many small businesses in particular are challenged right now.
“These challenges are running alongside the labour and skills shortages that continue to hamstring many in the industry. The majority of ARA members say the situation has gotten worse over the past three months and without government intervention, the situation will only deteriorate.”