National retail spending saw 3.11 per cent growth year-on-year in January (seasonally adjusted), showing a better than expected start to the retail year, according to the latest Australian Bureau of Statistics (ABS) trade figures released yesterday.
Monthly retail turnover rebounded softly in January with a 0.4 per cent increase to $25.73 billion, led by household goods sales, which jumped 1.4 per cent, and café, restaurant and catering service sales rising 1.6 per cent.
According to the Australian Retailers Association (ARA), post-Christmas spending estimates by ARA and Roy Morgan Research predicted sales growth of 2.9 per cent over this period, and exceeding this figure is a strong sign for a broader rebound in the retail sector.
“Coming off the back of a moderate Christmas sales period, this post-Christmas sales figure is positive indication for the rest of the trading year,” said Russell Zimmerman, ARA executive director. “We are expecting this future growth to be complimented by improved conditions due the forthcoming reduction in Sunday Penalty Rates, leading to increased trading hours and greater sales volumes.”
Clothing, Footwear and Personal Accessory retailing saw strong growth of 5.18 per cent year-on-year, continuing December’s positive sales trend, warm summer weather and sustained post-Christmas discounting cycles.
Food Retailing followed suit with a steady yearly growth figure of 3.49 per cent, with the Takeaway Food Services sub-category again booming with an exceptional increase of 11.91 per cent year-on-year.
Liquor Retailing remained robust (4.77 per cent year-on-year) with increased consumption over the latter part of the festive season, and Supermarkets and Grocery Stores posted the strongest figure in several months with a year-on-year growth of 3.38 per cent.
“This result is likely attributable to a reduction in deflationary pressure on supermarkets, as seen by increases in both volumes and sales in the category,” Zimmerman said.
Zimmerman said on the other end of the spectrum, Hardware, Building and Garden Supplies saw a disappointing year-on-year growth of 0.72 per cent, a likely outcome of the ‘Masters effect’ resulting from the closure of a large number of stores as the brand winds down operations.
“With these closures there is a large volume of leftover stock in the market that is being discounted or dumped, bringing down prices across the retail hardware segment,” he said.
“However, we are expecting this low growth to pickup in the near future as the category returns to normal trading patterns and large players in the space take over Masters storeswhich are now closed.”
Dominique Lamb, National Retail Association’s (NRA) CEO, said the figures represented a promising sign to the start of 2017 for retail.
But she also urged the federal government to respect the decision handed down by the Fair Work Commission (FWC) on penalty rates in order to fully unleash the industry’s potential for sustaining and creating jobs.
“The ABS retail figures for January 2017 are a promising start to the year for retail and hopefully it means we won’t see a repeat of the slow start to the year that we saw in 2016,” Lamb said.
“But if we are to ensure that retail doesn’t experience the same sluggishness in the first six months of 2017, it is vital that the federal government does not seek to overturn the decision by the Fair Work Commission on penalty rates.”
Lamb said the independent commission came to the conclusion that a reduction in Sunday penalty rates will help foster job creation in the industry and allow in some cases retailers who currently close on a Sunday to now open their doors for trade.
“The decision by the FWC was not in line with everything the NRA had argued for in our submission, but we certainly saw it as a step in the right direction.
“When businesses can’t afford to open, they can’t create jobs, nor contribute to the economy, so by reducing these barriers for small business, we believe that the FWC decision has the potential to unlock jobs in retail and result in a boost to total retail sales.
“This reform also has the potential to enable retailers to sharpen their prices in order to compete with on-line sales and to boost local spending.”
Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.