Australian retail turnover rose 8.5% in according to the latest Australian Bureau of Statistics (ABS) figures, following a rise of 0.6% in February.
But COVID-19 heavily impacted retail trade in March, according to Quarterly Economy Wide Surveys director, Ben James. “There was unprecedented demand in food retailing, household goods and other retailing. However, the impact of social distancing regulations saw historic falls for cafes, restaurants and takeaway food services. There was discretionary spending in clothing footwear and personal accessory retailing too and department store sales were also weak.”
Australian Retailers Association CEO, Paul Zahra, said retail trade figures reporting year-on-year growth of 10.1%, were consistent with expectations of strong pre-lockdown specific category growth, whilst the majority of retailers shut their doors for COVID-19.
“March was the eye of the COVID-19 storm for retailers, with all but essential service retailers forced into closure of their physical stores during lockdown. Whilst that pain of closure has continued during April and into May, we have seen some gentle upside begin as many stores enhance their online and delivery services,” he said.
“Since the COVID-19 pandemic began, we have anticipated a spike in certain categories as people adjust to restrictions, but these increases mask bigger falls across discretionary categories, which has proved a significant challenge,” Zahra said. “It’s been unquestionably tough for retailers, and the true recovery picture won’t start to emerge until physical stores reopen more fully in the coming weeks, but we are likely to see a phased re-opening. We anticipate continued caution by consumers for some months forward as they assess overall economic conditions.”
Zahra said retailers had swiftly adapted to the new conditions, with a jump in online sales set to become the new normal. “Online sales have skyrocketed, and we expect that shopping habits we have seen will be permanent, as retailers offer new options such as kerb-side pickup and retail-to-go options,” he said.
According to the National Retail Association while the retail trade figures for March represent a giant jump in turnover, there are ominous signs the impact COVID-19 will have on the sector.
NRA CEO Dominique Lamb said the figures needed to be put into context given the impact Covid-19 has had since then.
“April will be the first full month to incorporate the full extent of the lockdown restrictions, social distancing and the scaling down of services for cafes and restaurants. Retail is bracing itself for very sobering results for April onwards. This remains an unprecedented economic challenge and struggling retailers need as much support as possible from governments at all levels to survive the COVID-19 crisis,” she said.
Consumer confidence still going up
Consumer confidence continued to pick up rising 5.3%, according to the latest Roy Morgan ANZ report. All subcomponents gained although household consumption intentions were weaker, declining 2.5%.
ANZ head of Australian Economics, David Plank, described the strength in confidence as “encouraging,” with overall sentiment now around the levels seen during the GFC. And, a number of the sub-indices have returned to levels that, while still low, are within the previous historical experience.
“We think the gain over the past week is predominantly attributable to the further easing of COVID-19 restrictions and optimism surrounding daily new cases figure. However, there is a long way to go before sentiment gets to levels where people can be said to be optimistic. The weakness in inflation expectations continues and could be a lasting feature of the pandemic,” Plank said.