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Retail ‘Back to Earth’ As Covid Curve Flattens

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Retail sales figures came back to earth with a thud in April after a record, coronavirus-fuelled rise in March—but the ride isn't over yet, with May sales set to spike as lockdowns ease and more stores reopen.

That's the preliminary verdict on ABS retail trade data, which shows retail trade plunged by a record 17.9 per cent in April after rising a record 8.5 per cent in March, with retail trade in April down 9.4 per cent over the year.

Sales in the food retailing industry slumped 17.1 per cent in the wake of the panic-buying driven 24.1 per cent surge in March, but they were still noticeably above pre-virus levels.

While March saw a mix of impacts related to Covid-19 across industries, they were overwhelmingly negative in April, as businesses reported that regulations regarding social distancing measures limited their ability to trade as normal for the entire month.

The ABS data reveals steep falls in trade from cafes, restaurants and takeaway food services, clothing, footwear and personal accessory retailing in April; department stores also fell heavily and there were "no offsetting rises in the other industries".

Analysis of supermarket and grocery store scanner data shows that monthly retail turnover fell in original terms for non-perishable goods, perishable goods and all other products by 23.7 per cent, 15.3 per cent and 24.5 per cent respectively in April 2020 compared to March 2020.

These falls follow significant unprecedented demand in March 2020 where non-perishable goods rose 39 per cent, perishable goods rose 21.6 per cent and all other products rose 30 per cent.

Turnover in clothing, footwear and personal accessory retailing, and cafes, restaurants and takeaways is around half the level of April 2019.

With the mass transition to working from home due to coronavirus lockdown measures, the strong result for online retailing is unsurprising, with 10 per cent of total retail turnover purchased online.

CommSec's chief economist, Craig James, said the volatility is set to continue as retail sales are likely to bounce higher in May as more stores re-open.

"Perhaps the shape will be more like an ‘N’ rather than the ‘V’, ‘U’ or ‘W’ curves that we often hear about."

The good news, James says, is that the "Covid curve" is still flat—and with the right approach, things will continue to look up.

"Consumer confidence is improving and people are returning to their workplaces. It's baby steps, but Australia is moving in the right direction.

"We are now seeing a re-awakening in Australia, especially in the north and west. Shops are slowly re-opening and people are venturing out of their homes."

Teasurer Josh Frydenberg has estimated that an easing of the three stages of lockdown restrictions will boost economic activity by $9.4 billion a month—$2.4 billion of which is expected to come from the opening of cafes, pubs, clubs, entertainment venues, health and gyms.

The process is already well under way, with Australia's two largest ASX-listed retail property managers, Scentre Group and Vicinity Centres, now focused on Covid-19 recovery after a whirlwind quarter which saw both groups withdraw earnings and distribution guidance.

"Some savvy businesses, like clubs, have used the past few months to refurbish, so they are ready to greet patrons and perhaps entice new clients, customers or members," James said.

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Article originally posted at: https://theurbandeveloper.com/articles/abs-retail-sales-figures-may-coronavirus