Retail sales volumes suffer third consecutive quarterly drop

Australian retail sales volumes have fallen for a third consecutive quarter for the first time since 2008, putting the industry under intense pressure.

The Australian Bureau of Statistics revealed a 0.5% drop in retail sales volumes for the June quarter, following a 0.8% drop in the March quarter and 0.4% in December 2022.

June 2023’s retail sales volumes were also down year-on-year compared to June 2022, which saw an increase of 1.2%.

ARA CEO Paul Zahra said the decline demonstrates a continued slowdown in consumer spending – piling further pain on retailers amid a cost-of-doing-business crisis.

“The last time we saw three consecutive quarters of retail sales volume decline was in the Global Financial Crisis – which gives us a concerning insight into the current economic climate,” he said.

“Retailers are seeing less demand at a time where wages, rents, insurance, utilities, supply chain and materials are all increasing in cost.

“In wake of this data, which demonstrates the impact on retail employers around the country, we strongly urge the Reserve Bank of Australia to continue to show restraint in future monetary decisions.

“Sales volumes are a good indicator on the health of retail as sales revenue numbers can mask pricing and hence, profitability.”

Food retailing sales volumes (down 0.7%) fell for the second time in a row. For the first time since September 2021’s pandemic lockdowns, sales at cafes, restaurants, and takeaway food services (down 0.1%) dropped.

Retail sales volumes in household goods (down 1.5%) and department stores (down 1.4%) also fell.

Clothing, footwear and accessories were the only category to show retail sales volume growth (up 1.1%) while other retailing remained stable (0%).

“Clothing and apparel sales received a sugar-hit due to increased promotional activity with heavy discounting heading into winter clearance sales events,” Mr Zahra added.

“Most other categories suffered as a result of consumers prioritising essentials like food and cutting back on discretionary spending.”

ENDS      

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