12th May, 2020

Record rise in Australian retail trade fuelled by essential goods

March retail turnover grew 8.5 percent, but a closer look reveals how COVID-19 has created a clear division in consumer spending habits.

The Australian Bureau of Statistics (ABS) recently released its latest Retail Trade figures.

The report showed that Australian retail turnover grew 8.5 per cent in March this year, seasonally adjusted.

But, this growth wasn’t seen across the board.

According to Ben James, Director of ABS’s Quarterly Economy Wide Surveys, “There was unprecedented demand in food retailing, household goods, and other retailing.”

During March 2020, food retailing grew 24.1 per cent, household goods rose 9.1 per cent, and other retailing improved by 16.6 per cent (all seasonally adjusted figures).

The growth in food sales lines up with information shared by the Australasian Association of Convenience Stores (AACS).

In its new State of the Industry Report, also released this week, the organisation noted that the performance of the food and beverages category helped catapult the value of the convenience channel to almost $8.8 billion in 2019.

Food sales in convenience stores were up close to 6 per cent last year, reaching $4.038 billion.

AACS chief executive Jeff Rogut indicated that such strength in demand was likely to show up in 2020 data, too.

“The value proposition we provide consumers has never been clearer than right now as the coronavirus pandemic plays out,” said Rogut.

“The strong 2019 result, and the way we are still serving our customers today in bright, modern, clean and safe stores is a testament to the many great operators and staff who make our industry tick.”

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COVID-19 hits hospitality, discretionary spending hard

As entrepreneurs around the country have seen for themselves firsthand, the news certainly isn’t all good.

While March saw the strongest rise in food retailing numbers since the ABS data series has been running, the period also saw the biggest fall in cafes, restaurants and takeaway food services in the series’ history.

The sector fell 22.9 per cent over the month.

ABS director Ben James confirmed that “COVID-19 heavily impacted retail trade in March,” causing both highs and lows.

“The impact of social distancing regulations saw sales fall in cafes, restaurants and takeaway food services, and discretionary spending in clothing footwear and personal accessory retailing, and department stores, was also weak,” said James.

The decline in clothing footwear and personal accessory retailing came in at 22.6 percent, while department store sales fell 8.9 per cent.

Thankfully, there was one other ray of light to focus on in the ABS numbers.

During March, online retail turnover added 7.1 per cent to Australia’s total retail turnover in original terms.

This figure equaled a 0.5 per cent rise from February 2020 and a 1.4 per cent increase above the number reported in March 2019.

According to a media release from the Australian Retailers Association (ARA), this boost to online sales came as no surprise.

ARA chief executive, Paul Zahra, said the organisation had anticipated the jump as retailers had to adapt quickly to lockdown restrictions and new trading conditions.

“Online sales have skyrocketed, and we expect that shopping habits we have seen will be permanent as retailers offer new options such as kerb-side pickup and retail-to-go options.”

Zahra noted, too, that “March was the eye of the COVID-19 storm for retailers, with all but essential service retailers forced into closure of their physical stores during lockdown.

“Whilst that pain of closure has continued during April and into May, we have seen some gentle upside begin as many stores enhance their online and delivery services.”

With a likely phased retail re-opening on the cards in the coming weeks and months in Australia, only time will tell how businesses fare as the year progresses.

Zahra commiserated with those in the industry.

“It’s been unquestionably tough for retailers, and the true recovery picture won’t start to emerge until physical stores reopen more fully in the coming weeks,” he said.

The ARA expects Australians to start engaging in shopping, one of their favourite leisure activities, again soon, but, “we do anticipate continued caution by consumers for some months forward as they assess overall economic conditions”.