Retail sales still on track for bumper festive season
The Australian Bureau of Statistics released its latest figures showing retail sales are still going strong with $35 billion spent in stores and online in October.
While this is an increase of 12.5 per cent on the same time a year ago, retail turnover fell 0.2 per cent compared to the previous month, the first monthly fall of the year.
Australian Retailers Association (ARA) CEO, Paul Zahra, says whilst the results remain solid for retail, some softening of sales is inevitable as Australians confront the cost-of-living challenges.
“October results remain strong when compared to the same period last year and that is a remarkable result in the face of current challenges,” he says.
“Early indications of Black Friday/Cyber Monday sales point to being record-breaking based on foot traffic and anecdotal feedback, however, these results could be due to delayed purchases and Christmas purchases brought forward. The success of this global event can only really be determined at the end of the all-important Christmas trading quarter.”
“We are optimistic about pre-Christmas trading, anticipating a $63.9 billion spend this year, up three per cent on 2021 spending according to our ARA-Roy Morgan predictions. However, it’s important to acknowledge that price increases are a factor in these numbers and are also driving Australians to spend to get in ahead of inflation. We haven’t yet seen the forecast inflationary peak and we anticipate a softening of sales in 2023.”
Indeed, National Retail Association interim CEO, Lindsay Carroll, says the fall in turnover was imminent as the economy caught up with increasing costs.
“We’re finally starting to see the cost of goods and services outperform the demand,” she says.
“Households are feeling the impact of higher bills and are reeling in their discretionary spending. Department stores, clothing and household goods suffered the largest fall in spending last month, dropping 2.4 per cent, 0.6 per cent and 0.5 per cent respectively.
“Presumably consumers are cutting back in these areas in preparation for spending big during the Christmas and holiday season.
“Inflation is here to stay, particularly with the prospect of increased wages from the IR Bill set to pass this week. It is time for the RBA to shift gears and address the supply-side challenges that are exacerbating costs.”