Both fashion and department stores are navigating spending strapped consumers, with many retailers relying on discounting to stimulate discretionary spending.
Clothing, footwear and accessories retailing copped a 0.2 per cent fall in revenue in May 2024 year-on-year, with department stores facing the harshest fall in spending of 1.7 per cent, new Australian Bureau of Statistics (ABS) data revealed.
However, clothing, footwear and personal accessory retailing had the largest rise in May month-on-month of 1.6 per cent, following two consecutive falls in April and March. Meanwhile, department store sales fell by 0.9 per cent month-on-month.
ABS head of business statistics Robert Ewing said overall retail turnover was boosted in May by watchful shoppers taking advantage of early end-of-financial-year promotions and sales events.
When it comes to retail spending overall, including food retailing, spending is up 1.7 per cent year-on-year and 0.6 per cent month on month.
“Retail businesses continue to rely on discounting and sales events to stimulate discretionary spending, following restrained spending in recent months,” Ewing said.
“Despite the seasonally adjusted rise, underlying spending remains stagnant with retail turnover flat in trend terms. Compared to May 2023, trend is only up 1.5 per cent.
“Many retailers started end-of-financial year sales early, offering larger discounts than usual and noted that shoppers remain price-sensitive in response to persistent cost-of-living pressures.”
National Retail Association interim CEO Lindsay Carroll said the end-of-financial-year sales events follow similar trends in November ahead of Black Friday sales.
“These early promotions and sales follow the same trend we saw in November last year, when retailers offered large Black Friday sales four weeks out from the actual shopping event,” Carroll said.
“While the sales boost is a positive indicator for consumer sentiment, it doesn’t change the desperate landscape retail business owners are currently facing.”
Carroll added that the economic headwinds retailers are up against have only gotten worse following a 3.75 per cent increase to modern award minimum wages.
“Retailers cannot continue to rely on heavy discounting strategies to keep their businesses afloat, and the Reserve Bank must take these factors into consideration when they meet in August,” she said.
“We hope policymakers will steady their hand at the next Reserve Bank meeting and see the value in sustaining Australia’s second-largest employer.”