Mid-year sales boost spending in June

Consumers spent $36.2 billion across the country in June, according to figures released by the Australian Bureau of Statistics (ABS).

Australian retail turnover rose 0.5%, following a rise of 0.6% in May and a rise of 0.2% in April. Year on year, retail sales increased 2.9%.

“End-of-financial year sales boosted spending in June by more than usual, particularly on discretionary items like furniture, electrical goods and clothing,” says ABS Head of Retail Statistics Ben Dorber.

Turnover rose in all industries in June except for cafes, restaurants and takeaway food services, which was relatively unchanged.

The rise in turnover was driven by spending in non-food-related industries. Household goods retailing (up 1.1%) had the largest rise, followed by department stores (up 1%), other retailing (up 1%), and clothing, footwear and personal accessory retailing (up 0.7%).

Retail volumes

Retail sales volumes fell 0.3% in the June quarter.

The fall in June quarter followed a drop of 0.4% in the March quarter and a rise of 0.4% in the December 2023 quarter.

“Retail sales volumes fell for the sixth time in the past seven quarters, reflecting that consumers continue to hold back on spending. It also shows that much of the growth in monthly retail turnover reflects higher prices,” says Mr Dorber.

Year on year sales

Other retailing saw the strongest growth in June (up 6.3%) year-on-year along with department stores (up 4.2%).

The staple category of food increased (up 3.1%) with clothing, footwear and accessories showing welcome growth (up 2.2%) after three consecutive months of decline. Household goods (up 1.1%) and cafes, restaurants and takeaway services were up modestly (up 1.1%).

Australian Retailers Association (ARA) CEO Paul Zahra says that while strong mid-year/EOFY sales would have fueled the slight uptick, retailers still have a challenging road ahead.

“We saw many Australians embrace EOFY sales this year due to the ongoing cost-of-living crunch as a means of stretching their household budget,” he says.

“While retailers have enjoyed a slight uptick during June, growth remains modest, and challenges remain as retailers navigate high business costs and a slowdown in discretionary spending.

“There is no doubt shoppers are still feeling the pinch and are, therefore being stricter with their spending habits. The RBA decisions for the remainder of this year will have a critical impact on consumer spending and the viability of vulnerable retailers and in particular small business.

“Spending on essentials such as food has remained stable, and there has also been an ongoing shift towards lower priced, value-oriented products.

“The ARA continues to call for targeted government support for vulnerable businesses. Retailers are also battling a retail crime wave, ongoing labour shortages and continued supply chain pressures alongside the most intense changes to our workplace relations system in more than a decade.

“While June retail sales numbers are modestly pleasing, these results are predominately driven from discounting which may impact profitability for many discretionary retailers, particularly small businesses.”