Retail turnover up 0.2% in August

Australian retail turnover increased 0.2% in August 2023, according to seasonally adjusted figures released by the Australian Bureau of Statistics (ABS). This follows a 0.5% increase in July 2023 and a 0.8% decline in June 2023.

ABS Head of Retail Statistics Ben Dorber says: “The modest rise in August shows consumers continued to restrain their retail spending.

“In trend terms, retail turnover rose 0.1%, and was up only 1.3% compared to August 2022 – the smallest trend growth over 12 months in the history of the series.

“Considering how high inflation and strong population growth has added to retail turnover in the past year, the historically low trend growth highlights just how much consumers have pulled back in response to cost-of-living pressures,” Mr Dorber said.

Clothing, footwear and personal accessory retailing (+1.3%) recorded the largest rise, followed by cafes, restaurants and takeaway food services (+0.7%), other retailing (+0.7%), and department stores (+0.4%).

“Warmer than usual weather and additional promotional activity linked to Afterpay Day lifted spending on discretionary goods, especially clothing, footwear and personal accessories,” Mr Dorber said.

“Spending was again boosted by the 2023 FIFA Women’s World Cup with strong demand for fan gear and increased spending across cafes, restaurants and takeaway food outlets as large crowds attended matches and live sites across the country.”

Household goods retailing recorded a third consecutive decline (-0.4%), and the ninth monthly decline in turnover in the past 12 months. Food retailing declined 0.3%.

“Food retailing turnover fell for the second straight month. Yesterday’s release of Monthly CPI showed that food inflation continued to ease, particularly for fruit and vegetable prices.”

Retail turnover was mixed across the states and territories, with modest results across the country.

August retail sales show modest growth, driven by food

Australian retail sales increased 1.5% year-on-year in August as food, cafe, restaurant and takeaway spending again offset discretionary spending declines.

Shoppers spent more than $35.4 billion across the country in August, according to ABS.

The most significant year-on-year sales increases came from cafes, restaurants, and takeaway (up 8.0%) and food (up 3.5%).

Clothing, footwear and accessories rebounded from decline in July, up 1.4% in August. Department stores on the other hand recorded a decline (down 0.6%) while other retailing recorded very modest growth (up 0.1%).

Household goods again recorded the biggest decline (down 6.6%), marking eight consecutive months of negative growth.

Most states and territories recorded growth year-on-year, led by ACT (up 5.5%), Western Australia (up 4.0%), Northern Territory (up 2.8%), South Australia (up 2.6%), Victoria (up 1.9%), New South Wales (up 0.6%) and Queensland (up 0.3%).

Tasmania recorded negative growth, year-on-year (down 1.0%).

Australian Retailers Association (ARA) CEO Paul Zahra says consistent spending on essentials like food, cafe, restaurants and takeaway made retail’s performance in August look more favourable than reality.

“As food sales continue to grow off the back of unavoidable price increases, most other categories are suffering consistent spending declines,” Mr Zahra said.

“Takeaway food remains popular amongst Australians, particularly fast-food options, as they can often be a more affordable and easier alternative to feed a family.

“Clothing, footwear and accessories experienced a slight resurgence from July, likely as a result of additional discounting to clear winter merchandise ahead of Spring,” he said.

“Whist much has been said about the cost-of-living crisis, retailers are also experiencing a cost of doing business crisis and will be concentrating on offering the best service and value for budget driven shoppers as they lead into the all-important Christmas trading period.”

Retail trade growth at 0.2% seasonally adjusted monthly increase recorded over August equates to an increase in spending of 1.5% over the year, and is well below inflation rates, according to CreditorWatch Chief Economist Anneke Thompson.

“The one bright spot for retail trade was clothing, footwear and personal accessories, which were given an unexpected boost over the month by the FIFA Women’s World Cup and associated merchandise purchasing. Spending in this category grew by 1.5% over the month,” she said.

Food retailing continues to fall – down by 0.3% over the month. “This is likely due to falling prices in some major food categories, such as fruit and vegetables,” Ms Thompson said. “Strong population growth and a weakening economy usually results in food retailing being one of the strongest categories, so this is quite an unusual dynamic. It is also likely reflective of consumers trading down to cheaper alternatives of commonly purchased grocery items.”

The one consistent area of increased spending is cafe, restaurant and takeaway food services, which grew by 0.7% over the month. “It seems Australians are still keen to eat out and not give up their takeaway coffees,” she said. “However, despite strong demand in the sector, increased spending could also be attributed to many businesses being forced to increase prices.

“Moderating fresh food prices will be welcome relief for cafe and restaurant operators, however, energy, transport and insurance bills are all still rising considerably, and continue to impact the viability of many of these businesses,” Ms Thompson said.