Australian retail turnover fell 0.2% in October 2022, according to new figures released by the Australian Bureau of Statistics (ABS), despite a 12.5% increase in retail sales of $35 billion for the same time last year.
Within that, both department stores and clothing, footwear and personal accessories saw the largest drops for the month of 2.4% and 0.6% respectively. Department stores fell for the second consecutive month, while clothing, footwear and personal accessory retailing is down after a 2% rise in September.
This is the first overall monthly fall of the year in retail trade, following a 0.6% rise in both August and September 2022.
“The October fall in retail turnover ends a run of nine straight monthly rises and suggests increased cost of living pressures including interest rate rises have started to weigh on consumer spending,” ABS head of retail statistics Ben Dorber said.
“Turnover fell in all industries in October except for food retailing, which rose 0.4 per cent boosted by flood-related spending in parts of Australia and continued high food prices.”
Across the country, retail turnover saw falls recorded in most states and territories. The Northern Territory had the largest fall, down 1.8%, followed by Tasmania (-1.7%), the Australian Capital Territory (-1.4%), Queensland (-0.4%), New Souths Wales (-0.1%) and Victoria (-0.1%).
While Queensland and New South Wales had small percentage falls, these states recorded the largest falls in dollar terms. Turnover in South Australia and Western Australia was relatively unchanged.
Compared to the same time in 2021, year on year sales are up by 32.8% in clothing, footwear and personal accessories and up by 23% for department stores.
The ACT led the October year-on-year growth with 24.9%, followed by Victoria with 19.6% and NSW with 19.6% year on year growth.
Australian Retailers Association CEO Paul Zahra said whilst the results remain solid for retail, some softening of sales is inevitable as Australian’s confront the cost-of-living challenges.
“October results remain strong when compared to the same period last year, and that is a remarkable result in the face of current challenges,” Zahra said.
“We are optimistic about pre-Christmas trading, anticipating a $63.9 billion spend this year – up 3 per cent on 2021 spending according to our ARA-Roy Morgan predictions. However, it’s important to acknowledge that price increases are a factor in these numbers and are also driving Australians to spend to get in ahead of inflation.”
Zahra continued, nothing that Australia hasn’t yet seen the forecast inflationary peak, with the ARA anticipating a softening of sales in 2023.
“Early indications of Black Friday/Cyber Monday sales points to being record-breaking based on foot traffic and anecdotal feedback,” Zahra said. “However, these results could be due to delayed purchases and Christmas purchases brought forward. The success of this global event can only really be determined at the end of the all-important Christmas trading quarter.
“The rising cost of doing business along with supply chain disruptions and staff shortages remain top of mind for retailers. We continue to engage with governments around short and long-term solutions to aid the retail industry’s permanent state of disruption.”
National Retail Association Interim CEO Lindsay Carroll also commented on the retail trade downturn, saying the fall was imminent as the economy caught up with increasing costs.
“We’re finally starting to see the cost of goods and services out-perform the demand," Carroll said. "Households are feeling the impact of higher bills and are reeling in their discretionary spending.
Speaking on the drop in fashion and department stores, Carroll said consumers are presumably cutting back on these areas in preparation for Christmas and the holiday season.
She also said consumers have had to adapt to rising costs which has curtailed consumer spending.
“We are finally seeing the impacts of the RBA’s rate rises, which has become a balancing act for many households," Carroll continued. "Consumers are adjusting their budgets to be able to spend over the holiday season and carry them through the start of 2023, when we expect rate rises to have an even greater impact.
“Inflation is here to stay, particularly with the prospect of increased wages from the IR Bill set to pass this week. It is time for the RBA shift gears and address the supply-side challenges that are exacerbating costs.”
Among other industries, household goods retailing fell for the second consecutive month in October, down 0.5%, the fifth fall in the last seven months.
Cafes, restaurants and takeaway food services recorded its first fall since January 2022, down 0.4% and other retailing fell 0.2%. In its year on year trajectory, cafés, restaurants and take away food services is up 35.3% on 2021.
“Elevated post lockdown demand and price increases had boosted sales throughout the year in cafes, restaurants and takeaway food services,” Dorber said. “A slowdown in growth in recent months, capped off by the fall in October, shows trading conditions continued to normalise.”