The slight increase in retail turnover in the lead-up to the Christmas trading period should not lead to retailer overconfidence, according to EY Oceania managing partner Jenny Young, who said the industry is “not out of the woods yet”.
The retail industry reported a 0.3 per cent increase in total turnover in October compared to the previous month. This was 3.56 per cent up on the same period last year according to figures released by the Australian Bureau of Statistics yesterday.
However, Young said she expects retail sales over the holiday period to be impacted low wage growth and the cooling house market – particularly in the Sydney region.
“The outlook for the retail sector in 2019 is tough and businesses need to focus on innovation and differentiation, anticipating where consumer demand is moving to,” Young said.
The cooling of the housing market is likely to affect consumer confidence, especially in markets such as Sydney where a sense of wealth is intimately linked to the value of property, Young said, which may lead to a more wary consumer spend.
NSW saw an annual increase in turnover of 2.14 per cent, but on a month-by-month basis, turnover fell by 0.4 per cent.
“With the warm weather ramping up, we have noticed a considerable increase in the apparel category with shoppers purchasing fashion and accessories to wear for the warmer months ahead,” Australian Retailers Association executive director Russell Zimmerman said, pointing to the 4.84 per cent annual growth in the clothing, footwear and accessories category.
Zimmerman expects retailers will see a further uptick in sales as the holiday season progresses.
Similarly, National Retail Association deputy chief executive Lindsay Carroll said the increase in turnover should be welcome news to retailers, though the results don’t paint a picture of a thriving industry.
“Although we would ideally like to see monthly increases of 0.4 or even 0.5 per cent, we welcome the fact that these numbers are trending in the right direction as we head towards Christmas,” Carroll said.
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