The Executive Director of the Australian Retailers Association, Russell Zimmerman, said December data from the Australian Bureau of Statistics showing annual retail sales growth of 2.66% was “disappointing” after a sharp rise in November, but said this was not unexpected given natural disasters affecting the country over summer.
Mr Zimmerman said today’s numbers stalled any resurgence in consumer confidence shown by the November lift driven by Click Frenzy, Black Friday, and Singles Day, and said bushfires in many parts of Australia and the ongoing drought would have exacerbated any “December hangover” in the aftermath of those events.
“These numbers from the ABS, showing a slowdown in year-on-year retail sales growth in December to 2.66%, are pedestrian to say the least, but while we’re disappointed they’re hardly unexpected,” Mr Zimmerman said.
“We were excited by November, but we warned bushfires and drought would compound any effects of December sales being pulled forward by events such as Click Frenzy, which is almost certainly the case here,” he added.
Mr Zimmerman said that while year-on-year growth was the key index when interpreting retail sales data, month-on-month falls in Department Stores (-2.80%), Clothing, Footwear and Personal Accessories (-1.46%) and Household Goods (-0.29%) – three of the four worst December results, in categories where November retail events were widely promoted – underlined the point that December sales were probably pulled forward.
“A similar factor seems evident where bushfires are concerned, with the worst monthly results in South Australia (-1.34%) and New South Wales (-1.24%) occurring in two of the states worst affected by bushfires,” he said.
Mr Zimmerman noted the trend over the past year of Victoria (3.16%) and Queensland (4.67%) either at or near the top of year-on-year growth rates across the states continued in December, but noted that Tasmania (6.82%) had steadily crept up the list in recent months, suggesting the retail sector in the Apple Isle is particularly robust.
On a month-on-month basis, Mr Zimmerman pointed to lower turnover in Queensland (-0.45%) and said the public holiday there after 6pm on Christmas Eve – when consumers race to buy gifts and food – hurt traders.
“As we said recently, a survey in Queensland found 35% shut by 6pm and the owners of another 18% worked themselves or cut shifts: that’s less shops open and less money for workers to spend. It doesn’t help,” he said.
Mr Zimmerman said the ARA remained deeply concerned by the impact of bushfires in rural and regional areas.
“If there’s a hope amid this summer’s natural disasters, it’s that it’s finally raining across many of the worst-impacted parts of the country. While not drought-breaking, Queensland, NSW and Victoria have had good recent rains, which we hope will both mitigate the ongoing bushfire risk and bring drought relief,” Mr Zimmerman said.
Mr Zimmerman said that despite the disappointing numbers, January’s retail turnover figures were also likely to have been impacted by the natural disasters the summer has brought when they are released next month.
Mr Zimmerman emphasised that while the December numbers underlined concerns of a quiet Christmas for retailers, the outlook for the remainder of 2020 wasn’t necessarily pessimistic.
“When we saw the November numbers we thought that whilst Click Frenzy, Singles Day and Black Friday might have pulled some sales forward, but we also felt the result signalled a tentative return of consumer spending, and we still think that might resume once the impact of natural disaster washes out of the cycle,” he said.
“It’s difficult to draw too many conclusions from the December results because of the strength and number of extraordinary factors at work during that period, but we remain optimistic the retail sector is poised to bounce back strongly in 2020 as we have suggested for some time now,” Mr Zimmerman concluded.
Monthly Retail Growth (November 2019 – December 2019, seasonally adjusted)
Other retailing (0.19%), Food retailing (-0.29%), Household goods retailing (-0.29%), Cafés, restaurants and takeaway food services (-0.86%), Clothing, footwear and personal accessory retailing (-1.46%), and Department stores (-2.80%).
Tasmania (1.11%), Victoria (0.05%), Western Australia (0.01%), Australian Capital Territory (-0.06%), Northern Territory (-0.38%), Queensland (-0.45%), New South Wales (-1.24%), South Australia (-1.34%).
Overall month-on-month sales growth: -0.54%.
Year-on-Year Retail Growth (December 2018 – December 2019, seasonally adjusted)
Clothing, footwear and personal accessory retailing (4.79%), Food retailing (2.71%), Household goods retailing (2.63%), Other retailing (2.52%), Department stores (1.80%), and Cafés, restaurants and takeaway food services (1.76%).
Tasmania (6.82%), Queensland (4.67%), Australian Capital Territory (4.08%), Victoria (3.16%), Western Australia (2.98%), Northern Territory (2.49%), South Australia (1.30%), and New South Wales (0.82%).
Overall year-on-year sales growth: 2.66%.
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About us: founded in 1903, the Australian Retailers Association is Australia’s largest retail association, representing a $325bn sector employing more than 1.3m people. As Australia’s premier retail body, the ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 7,500 independent and national retail members. To learn more, visit www.retail.org.au or call 1300 368 041.