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Aus retail sales edge off highs
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Aus retail sales edge off highs


AUS RETAIL SALES EDGE OFF HIGHS

Matthew Hassan

May 10, 2021

Mar retail trade: +1.3%mth; +2.2%yr. Q1 real retail sales: –0.5%qtr (mkt –0.4%);
+4.7%yr. Reopening rebounds shifting more towards non-retail spend.

Read full article 'Australian retail sales Q1' (PDF 286kb)

Retail sales volumes declined 0.5% in Q1, a touch softer than forecast but
largely in line with expectations going into the release. Sales remain at a
relatively high level, up 4.7%yr and 5.9% above their pre-COVID levels in late
2019.

Retailers have had a patchier start to 2021 after coming off a strong surge over
the second half of 2020. 'Reopening rebounds' have been disrupted by a series of
mini-lockdowns with states opting for short, sharp closures to head off
outbreaks before they are allowed to seed (NSW in Dec-Jan; Qld in Jan and again
in March; WA in Jan and Apr; and Vic in Feb). Feb also saw disruptions from
flooding across parts of in eastern Australia, including Sydney. At the same
time, 'catch-up' demand from last year looks to have waned somewhat while a
further relaxation of restrictions (outside of periodic lockdowns) looks to be
seeing some shift back from goods to services.

These themes were evident in the survey detail.

By storetype nationally, cafes and restaurants showed a strong gain (+5.8%qtr),
much of which looked to be a switch out of basic food (–2.7%qtr). Amongst the
non-food categories, household goods declined 1.6%qtr, but is still at a very
high level, up 12.5%yr. Both clothing (–0.7%qtr) and department stores
(+0.2%qtr) both look to be cycling 'catch-up' sales (+34.6% on a combined basis
over 2020H2).

By state, Vic was the only major state to see sales volumes rise, +1.3%qtr, with
reopening gains outweighing a mini-lockdown mid month. Across the others, WA
sales fell –1.8%qtr, Qld –1.2%qtr and NSW –1.1%qtr. While mini-lockdowns and
floods impacted, some of the variation also looks relate to how advanced
reopenings are – Vic is lagging about a quarter behind but SA – a state that saw
most local restrictions relaxed over six months ago – also saw a 0.5% decline,
coming off a 2.5% fall in Q4 (which had partly related to a brief lockdown in
Nov).

By business size – small retailers continue to benefit most from reopening,
nominal sales up 11.2%qtr compared to a 0.5%qtr dip for large non-food retailers
and a 1.1% decline for the major food retailers.

By channel, physical/in-store sale were flat but online sales declined 1%qtr.
Other partial data shows similar themes for vehicle sales, which were
essentially flat in Q1 after a huge 30% jump in Q4. Auto fuel sales volumes are
also tracking only a slight rise in Q1 after rebounding 9% in Q4.

The tricky part with retail sales and all of these other partials is judging how
representative they are of the broader consumer spend in Q1. The biggest
reopening gains are happening in discretionary services – a segment that was
still operating 27% below pre-COVID levels in Q4 and which falls largely outside
the scope of the retail survey (cafes and restaurants a notable exception).
Private business surveys showed a very big gain for 'consumer service' sectors
in Q1, a swing that we think will still see broader spending post a solid 2%
lift overall despite soft reads across a wider range of retail categories.

Matthew Hassan, Senior Economist, ph (61-2) 8254 2100. 

See article tags
Australia Retail_Trade retail shop spend consumer
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