Consumers spent $35.9 billion across the country in May, according to figures released by the Australian Bureau of Statistics (ABS).
Australian retail turnover rose 0.6%, following a rise of 0.1% in April and a fall of 0.4% in March. Year on year, retail sales increased 1.7%.
“Retail turnover was boosted this month by watchful shoppers taking advantage of early end-of-financial year promotions and sales events,” says ABS Head of Business Statistics Robert Ewing.
“Retail businesses continue to rely on discounting and sales events to stimulate discretionary spending, following restrained spending in recent months.
“Despite the seasonally adjusted rise, underlying spending remains stagnant with retail turnover flat in trend terms. Compared to May 2023, trend is only up 1.5%.”
Food and beverage
Food-related spending was mixed, with a rise in food retailing (up 0.7%) and a small fall in cafes, restaurants and takeaway food services (down 0.1%).
The growth in food retailing was driven by a large rise in liquor retailing (up 6.1%), after a large fall in April (down 7.4%).
“People appear to have returned to usual purchasing habits after opting for cheaper alcoholic products in March, stocking up more than usual in the lead up to Easter, resulting in a lower growth rate in April,” says Mr Ewing.
“Large cultural events continue to impact cafes, restaurants and takeaway food services, with the fall in May a reversal of increased spending associated with LIV Golf Adelaide and the AFL Gather Round in South Australia last month.”
Non-food
Turnover in most non-food related industries rose in May.
Clothing, footwear, and personal accessory retailing had the largest rise (up 1.6%) following two consecutive falls in April and March.
Household goods retailing (up 1.1%) and other retailing (up 0.2%) also rose, while department stores fell (down 0.9%).
Year on year sales
Other retailing – including cosmetics, sports and recreational goods – saw the strongest growth in May (up 3%) year-on-year along with the staple category of food (up 3%). Cafes, restaurants and takeaway saw a modest increase (up 0.9%), along with household goods increasing modestly (up 0.1%) year-on-year after five months of consecutive declines.
Clothing, footwear and accessories declined (down 0.2%) along with a drop in department store spending (down 1.7%) Both recorded year-on-year declines for the third consecutive month.
Australian Retailers Association (ARA) Chief Industry Affairs Officer Fleur Brown says the continued decline of discretionary categories highlights the financial strain shoppers are feeling.
“Australians are doing it tough, facing an ongoing cost-of-living crunch and high interest rates. It’s no surprise these pressures are reflected in May’s retail trends, and it is concerning for retail,” she says.
“While food spending remains constant as a staple, there has been a shift towards more affordable and value-oriented products in recent months.
“The discretionary categories are being hit the hardest, as seen with household goods, clothing and department stores.
“Other retailing is the only standout performer in May, and that’s typically because beauty products are the last category to be affected by economic downturns.
“The ongoing cost-of-living pressures, interest rate ramifications and increased cost of doing business make it a challenging period – particularly for those in the discretionary retail sector and small to medium size businesses.
“The ARA continues to call for targeted government support for vulnerable businesses. Retailers are not only contending with slow consumer spending and higher costs of doing business – they are also battling a retail crime wave, ongoing labour shortages and continued supply chain pressures alongside the most intense changes to our workplace relations system in more than a decade.”
