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Retail Trade Posts Worst Monthly Performance in Four Years

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Australia's retail sector has posted its sharpest fall in four years, dropping 0.6 per cent and confounding economists' expectations of a 0.3 per cent increase. 

In the largest monthly decline since March 2013, the ABS also revised their retail trade figures for July to show a 0.2 per cent fall.

It included a 1.3% fall in cafe, restaurant and takeaway food spending.

The 0.8 per cent slump in July and August is the largest two-month decline in seven years.

In seasonally adjusted terms, there were falls in food retailing (-0.6 per cent), cafes, restaurants and takeaway food services (-1.3 per cent), household goods retailing (-1.0 per cent) and clothing, footwear and personal accessory retailing (-0.2 per cent). There were rises in department stores (0.7 per cent) and other retailing (0.1 per cent) in August 2017.

All states and territories posted declines with Victoria and Queensland leading the falls both at 0.8 per cent.
According to Suzee Brain, director at Brain & Poulter food consultants, developers, retailers and shopping centre owners have been taking advantage of the food "boom" to add additional food GLA to their assets as consumers spend a greater proportion on food and beverage when compared with traditional retail.

"This month’s figures showing a drop of 1.6 per cent month-on-month for café sales could be seen as a caution that food is reaching an oversupply” Brain said.

“While this could be seen as a potential downturn on it’s way, our internal tracking of the ABS retail sales data reveals that while there are regular monthly fluctuations in the retail sales results, [and] on an annualised basis to August 2017 takeaway food saw an increase of 6.8 per cent and café and restaurants saw an increase of 3.9 per cent from the year before.

“All in all we are confident that the demand from customers for more dining-out options is set to continue."
Online retailing continued to rise 1.7 per cent in August, contributing 4.6 per cent to total retail turnover in original terms. This rise lifted online penetration of brick and mortar stores to 7.5 per cent.

No clear explanation could be provided for the surge in online spending by NAB chief economist Alan Oster, though the possibility of the stronger Australian Dollar may have an effect.

Commonwealth Bank economist Gareth Aird described the report as a "shocker".

The Asia-Pacific economist for jobs website Indeed, Callam Pickering said that the latest retail data would generate considerable debate within the Reserve Bank.

"We don't believe that we are facing a retail recession but it is a timely reminder that retail conditions rarely stay strong for long unless they are driven by wage or salary growth.

"Lack of wage growth and high household debt have created a difficult retail environment and that will continue to contain retail sector growth over the next few years." Pickering said.

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Article originally posted at: https://https://theurbandeveloper.com/articles/retail-trade-posts-worst-monthly-performance-four-years