Retail sales improve in January

Retail sales held up well in January, according to Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payment.

Despite rising Omicron cases in early January and impacts to staff and supply chains, the majority of retail sectors experienced year on year growth.

Retail sales across the country increased 4.9% in January compared to the same time the previous year and are up 14.4% on pre-pandemic levels two years ago.

Household goods was the top performing retail category, up 10.4% in January compared to the previous year. This was followed by clothing sales which increased 8.5%.

Department stores were the only retail category to record a decrease, down 2.7%. This is the eighth consecutive month of negative growth.

All states and territories recorded an increase in sales in January compared to the previous year, with Victoria leading the way, up 8.3%.

Australian Retailers Association CEO Paul Zahra says it’s pleasing to see that the Omicron outbreak has failed to dampen retail sales despite initial concerns about foot traffic and staff constraints in the early part of January.

“January was an up and down month for retailers – we began the year with a surge in Omicron cases, which impacted local supply chains and forced tens of thousands of workers into isolation each day,” he says.

“However, towards the end of the month, we saw daily caseloads start to come down, close contact isolation requirements were eased for essential workers and consumer spending started to lift. Overall, we’ve had a soft landing from Omicron and the impacts on sales have not been as severe as we originally feared.”

‘Uneven’ recovery

Recovery remains “uneven”, notes Mr Zahra, depending on what type of business you have and where you’re located. Cashflow concerns remain a challenge for many retailers, he says, coupled with rising supply chain costs.

“CBD retailers are a focus on our path to recovery with foot traffic through our capital cities still quite low with the absence of international tourists and exacerbated by people continuing to work from home. We are looking forward to the international border reopening, which is the first step towards the revitalisation of our city centres,” says Mr Zahra.

“Staff shortages will continue to compound recovery challenges and we continue to engage state and federal governments on solutions to this crisis. Supply chain issues are also continuing to bite, with many businesses having to make earlier upfront payments for stock due to manufacturing and shipping delays, with container costs significantly higher than their usual rates.

“Retailers have been resilient throughout the pandemic and will be breathing a sigh of relief that the worst of Omicron appears to have passed, and that consumer spending has remained fairly upbeat through this challenging period.”

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