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December retail sales mark solid end for Covid-impacted year

(Source: Bigstock)

Australian retail sales rose by 4.8 per cent in December according to retail trade data released by the ABS on Tuesday.

Most sectors posted year-on-year gains, with a 9-per-cent decline in department-store sales marking the worst-performing category overall. Sales in supermarkets and liquor stores rose by 2.2 per cent for the month. 

December’s figure followed three consecutive months of increases: November (7.3 per cent), October (4.9 per cent) and September (1.3 per cent).

Seasonably adjusted, monthly turnover fell 4.4 per cent compared to last month.

Trading conditions worsened in December due to the arrival of the Omicron Covid-19 wave that spread rapidly across the country, making consumers adopt caution.

ARA CEO Paul Zahra said the robust Christmas results provide a lifeline for struggling retailers, but all signs point to a dismal January as Omicron challenges continue to create a shadow lockdown. 

“Christmas sales are when most discretionary retailers make up to two-thirds of their annual profits. This solid December performance, following a strong November, will help replenish cash reserves for retailers affected by a year of restrictions and lockdowns.”

Zahra said it was pleasing to see categories such as clothing, footwear and personal accessories and hospitality surge at Christmas after a horror year.

“We can also see signs of a longer-term trend of the Black Friday weekend event and consumers shopping earlier for Christmas becoming cemented into the consumer mindset. Unfortunately, department stores continue to be affected by pandemic hesitancy and this ongoing challenge will create flow-on effects for other retailers particularly in our struggling CBD locations.”

He said the outlook for January and February is not as positive for retail with Omicron causing confidence levels to drop to their lowest level in 30 years.

“Foot traffic has slowed significantly and ongoing staffing shortages, supply chain delays and pricing increases are creating another dire set of trading conditions for retailers this year.”

December’s ABS figures show Victoria leading the states in growth, with sales up 6.5 per cent year on year, followed by WA (up 5.3 per cent), NSW (up 5.2 per cent) and Queensland (up 3.7 per cent). 

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