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Boost for preliminary retail trade figures

The latest ABS retail trade figures might have delivered some promising numbers but did not include the impact from the coronavirus crisis in Victoria.

Preliminary data showed a 2.4% increase in estimated retail turnover from May to June with turnover increasing 8.2% in June compared to the same period last year. Household goods retailing fell but remained 23% above June 2019 levels. Department stores also saw a significant fall after a large rise in May 2020, in seasonally adjusted month-on-month terms.

Australian Retailers Association CEO, Paul Zahra said the preliminary June data provided a glimpse of what demand may look like once COVID-19 restrictions are permanently lifted, “and it’s a healthier picture with a good appetite for spending”.

“These figures tell us government support measures are working as an effective economic stimulus and with JobKeeper and JobSeeker extended into next year, that’s heartening news.”

Discretionary retailers, particularly those selling clothing, footwear and personal accessories, continue to face difficult conditions despite the promising signs of June, with sales still remaining down year-on-year despite sales discounts and strong availability of stock following previous store closures, Zahra said.

“The impact of Victoria’s lockdowns is expected to be severe through July, dampening consumer sentiment and putting the brakes on a national recovery.”

Further comment came from National Retail Association CEO, Dominique Lamb who said the road to retail recovery following the COVID-19 wrecking ball remains long and fraught with hazards.

“We can’t accurately assess how retail is travelling by looking at one month in isolation. In the last four months’ turnover has fluctuated wildly due to panic-buying, lockdown restrictions and economic uncertainty,” Lamb said. “The second-wave of COVID-19 infections in Victoria, along with the subsequent re-imposition of restrictions, underlines that the future is far from certain.

While welcoming the extension of the JobKeeper program the NRA would have preferred to see it extended on an industry basis. “Only 1% of retailers are looking to employ more people at present. The extension of JobKeeper until March will hopefully result in a boost to business confidence, but many employers will continue to tread carefully.”

According to Ernst & Young chief economist Jo Masters, the preliminary retail trade data showed a solid rise in spending, capturing the easing of restrictions and improving confidence through most of June. However, she cautioned that it did not present an up-to-date picture as it did not capture the impact of the Melbourne lockdown.

“Monitoring of consumer confidence and how people responded to the announced extension, but curtailing of the JobSeeker and JobKeeper payments, as well as developments on the health front will be important for the retail sector in the next few months. We can expect the July retail sales to be less robust and serve as a reminder of the bumpy road to recovery.”

Spending on eating out, clothing and footwear was particularly strong and there continues to be a strong preference for cooking at home than pre-pandemic, she said.

“However, since June the Melbourne lockdown has dented activity in Victoria and hit consumer confidence around the country. Indeed, the data reveals evidence of hoarding, particularly in Victoria, in late June with toilet paper, pasta and rice again on the shopping list.”

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