Retail spending is faring better than general consumer spending, with retail volumes just falling 3.4 per cent over the June quarter, compared to the 12.1 per cent collapse in household spending volumes.
However, the retail sector is facing monthly swings in spending and an enormous gulf in performance by sector and across states, according to Deloitte Access Economics’ latest quarterly Retail Forecasts report.
“Retail spending has fallen at the fastest rate in nearly 20 years as Covid-19 cast a cloud over the consumer landscape,” Deloitte Access Economics partner, and Retail Forecasts principal author, David Rumbens, says.
“Yet it pales in comparison to the collapse in total consumer spending experienced over the quarter.
“The average retail growth rate also hides the complexity of the retail environment right now. After slumping in April, spending picked up through the quarter, with June retail sales up 7.4 per cent compared to the previous year. It also looks like that momentum has continued into the September quarter, with spending up 12 per cent in July compared to the same month a year prior.”
There is a wide range of growth performance across both categories and states. With people spending more time at home cafes, restaurants and catering services have gone into a tailspin, however, furniture, floor coverings, housewares and textile goods retailing has jumped by more than 20 per cent.
“And it’s not just categories experiencing a divergence in spend. Victoria’s second wave Covid outbreak and stage 4 restrictions have sent the state back into a spending slump. Meanwhile retailers in Queensland and Western Australia continue to benefit from the easing of restrictions,” says Rumbens.
But it’s not all bad news. The level of cash washing through the economy from fiscal stimulus is also unprecedented. Employee earnings might have dropped over the quarter, but household disposable income actually rose 2.2 per cent.
“Unfortunately, we weren’t willing to go out and spend this extra cash, with the savings rate skyrocketing to 19.8 per cent as households prepare for what they expect to be further difficult and uncertain times ahead.
“Looking forward, some parts of retail are expected to take longer than others to recover. Supermarkets, specialty food and liquor, household goods and other retailing have already exceeded December’s pre-Covid spending levels for spending over a whole quarter. However, it is expected to take much longer for department stores, catered food and apparel to reach this benchmark,” Rumbens adds.