Retail Sales Stagnate in July

Retail sales remained fairly stagnant over July, with economic concerns and weak consumer confidence contributing to the lacklustre spending.

The NAB Online Retail Sales Index declined by 0.36 percent in July according to the latest seasonally adjusted month-on-month data.

Source: NAB Online Retail Sales Index
Source: NAB Online Retail Sales Index

Year-on-year growth, however, remains in double digits, at 11.8 percent.

Australian consumers spent around $20.4 billion online over the past 12 months, equivalent to 6.8 percent of spending at traditional bricks-and-mortar stores.

SME sales represent just over one-third of all online sales (35.7 percent). Previously, SMEs have outpaced corporates in terms of month-on-month growth. This month, however, saw SMEs contracting by 1.3 percent compared with corporates contracting by 0.4 percent. When comparing year-on-year growth, SMEs (17.3 percent yoy) are still growing faster than corporates (11.8 percent yoy).

Source: NAB Online Retail Sales Index
Source: NAB Online Retail Sales Index

Total retail trade remained stagnant over July, with month on month seasonally adjusted growth rate of 0.0 percent, according to the ABS. Total retail turnover rose 2.7 percent year on year for July.

Russell Zimmerman, Australian Retailers Association Executive Director, said the figure is identical to June 2016, and is an indication that consumers were still reluctant to spend, with many possibly left reeling from economic and world concerns such as the close results of the Australian Federal election, and the Brexit vote.

“There are many factors that feed into this result, with economic uncertainty and low consumer confidence chief among these,” Zimmerman said.

“By July, mid-season sales have also slowed down, with many retail businesses having focused their discounting activities in June in an effort to prop up sales in the face of unseasonably warm winter temperatures,” he said.

Department stores appeared to the worst his, with ABS data showing a 3.8 percent yoy fall in department store sales.

“While some department store chains have seen steady gains thanks to restructuring and turnaround programs in recent months I suspect some of this result can be attributed to the highly publicised changes taking place at Target and Big W.

“There is strong evidence of discounting in the lower end of the market due to Big W and Target inventory writedowns,” Zimmerman said.

“The ARA holds some hope that the August reduction in interest rates will have some effect on consumer confidence and Australian’s willingness to spend in the coming months, however, should the trend of stagnant growth continue much longer, it becomes likely that the important Christmas shopping period will not be as profitable for retail businesses in 2016.”

 

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