August retail sales remain subdued

Retail sales had a slight rebound in August, but remain down year-on-year, according to Mastercard SpendingPulse.

Retail sales across the country increased 1.1 per cent in August compared to July (seasonally adjusted) and are up 1.6 per cent compared to before the pandemic in August 2019, but are down 2.3 per cent compared to August last year.

The year-on-year comparisons were mixed across the retail categories with clothing the most significantly affected (down 15 per cent) and department stores also impacted (down 3.5 per cent), while household goods saw gains (up 4.5 per cent) and food retailing was nearly flat (up 0.2 per cent).

ACT suffered the biggest drop in total retail sales out of all the states and territories, down 14.2 per cent as compared to 2019, with NSW also down (-4.9 per cent). Western Australia recorded the highest increase in sales for August compared to the same time in 2019―up 16.5 per cent.

Australian Retailers Association (ARA) CEO Paul Zahra says whilst lockdowns continue to impact in NSW, Victoria and the ACT, a retail reopening is on the horizon in time for the busy Christmas shopping season.

“The Delta devastation is threatening the survival of small businesses and some discretionary retailers, particularly those in the CBD locations, with many barely hanging on through existing state and federal supports,” he says.

“However, there is hope on the horizon with NSW set to start to open back up next month and Victoria and the ACT expected to follow suit.

“The timing couldn’t be more important as retailers gear up for the festive trading season when most discretionary retailers make up to two-thirds of their profits for the year and there are positive signs it’ll be a buoyant sales period.

“Research from the ARA in conjunction with Roy Morgan shows Australians are set to spend over $11 billion on Christmas presents this year and 79 per cent say they plan on spending the same or more than they did last year.

“However, the immediate challenges remain around the lockdowns and a lot of pain continues to be felt in parts of the country where stay-at-home orders are in place. The 70 per cent reopening trigger point can’t come soon enough and retailers are looking forward to welcoming customers back in their stores and to share in the Christmas spending spoils.”