Spending in the Australian retail sector has survived the onslaught of Covid-19 remarkably well, according to Deloitte Access Economics, though the risk of a large jump in administrations in early 2021 can’t be ignored.

According to DAE’s latest retail forecast, sales volumes across the retail industry surged 6.5 per cent during the September quarter and are expected to continue into the December quarter, with sales to grow 2.6 per cent in the 2020 calendar year.

DAE partner and retail forecasts’ principal author David Rumbens, the run into the ever-important Christmas period is look more positive than was previously expected.

“There are three key drivers of this stronger outlook: improved labour market conditions; the extension of JobKeeper for struggling businesses; and upbeat consumer confidence,” Rumbens said.

“Combined with good news on fewer restrictions, state borders opening up, and vaccines, this has enabled consumers to feel more at ease with spending heading into December.”

However, while certain sectors are enjoying a spendings boom, such as food and household goods, other sectors are not seeing an uplift in spending.

According to Rumbens, department stores and cafes are still seeing depressed sales, and could be among the first insolvencies of the new year after a year which has actually seen fewer insolvencies than average despite the difficult conditions.

“In 2019, nearly 500 retailers entered external administration by October, while in 2020 this dropped to around 300,” Rumbens said.

“The Christmas period is critical in any year, but for businesses facing significant disruption to operating conditions who relied on stimulus measures that are slowly fading and who haven’t made necessary structural adjustments, there is a risk that a poor sales performance could be the straw that breaks the camel’s back.”

Deloitte warned that the first half of 2021 may see an increase in insolvencies, as fiscal stimulus and support measures end and the specter of Covid-19 remains.