Christmas shopping falls on bushfires and Black Friday sales


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It’s official — December is rapidly losing its ascendancy as the most important month of the retail calendar.

More Australians are changing their spending habits by doing their Christmas shopping one month early to avoid the crowds and take advantage of increasingly popular sales events like Black Friday.

Retail turnover fell by 0.5 per cent in December (to $27.77 billion), seasonally adjusted, as revealed by the Bureau of Statistics in new data published today.

“The retail sales data highlights ongoing and considerable pressure in the retail sector, from both weak demand and ongoing price competition,” said EY’s chief economist Jo Masters.

“Consumers are clearly taking advantage of sales events, such as Black Friday in November, and this is underpinning pricing pressures.

“The drought and the bushfires crisis look to be impacting the retail space, and will likely continue to do so in coming months.”

December was widely expected to be a weak result given November’s reading surpassed many people’s expectations — up 1 per cent, according to the ABS’s upwardly-revised numbers.

In addition, more Australians are opting to do their shopping online, instead of physically walking into a bricks and mortar store.

The ABS figures also show that online turnover comprised 6.6 per cent of total retail spending in December, a significant bump from the previous year’s 5.6 per cent.

‘Mixed bag’

December’s result was a “mixed bag” given the “sharper than expected pull back”, said Westpac economist Matthew Hassan.

Like many other economists, he considered the retail figures were “better than expected” (when viewed from a quarterly perspective).

During the last quarter of 2019, retail sales increased by 0.5 per cent (to $80.19 billion).

This was a “surprisingly strong rise” as well as the “largest quarterly increase” since the June quarter of 2018, said NAB economist Kaixin Owyong.

Much of this strength came from the November figures, which include sales made during the Black Friday and Cyber Monday shopping events.

However, it came after a weak result in the three months leading up to September (-0.1pc).

The biggest contributors to the quarterly rise were household goods retailing (+1.4pc), clothing (+1.5pc), department stores (+2.1pc) and dining out (+0.5pc).

Ongoing weakness ahead

Retail is also expected to underperform in the next few months, and economists see it as a major factor in why the Reserve Bank may cut interest rates to fresh record lows this year.

The health of this sector is important because retail trade makes up a third of consumer spending, which in turn makes up around 60 per cent of Australia’s economy.

“Although the data were a surprise, we remain concerned about the impact of the bushfires and coronavirus in the near-term, and the potential for employment growth to slow over the next three to six months,” said BIS Oxford Economics’ chief economist Sarah Hunter.

“And the coronavirus is also going to be a drag, given its impact on tourist and student arrivals.

“We still expect the RBA to cut the cash rate one more time to provide further support, likely at the end of the second quarter.”

The ways in which coronavirus fears will affect the Australian economy are “relatively clear cut”, said the Commonwealth Bank’s chief economist Michael Blythe.

He said it will lead to “a reduction in household spending as consumers became more cautious and avoided social interaction” and “an associated drop in business and consumer confidence that reduces spending in the near term and potentially damages longer-term expectations”.

The bushfires, in particular, had a significant impact on New South Wales shoppers, where retail sales fell 1.2 per cent in December, seasonally adjusted.

Sales also fell sharply in South Australia (-1.3pc), Queensland (-0.5pc) and the Northern Territory (-0.4pc). But sales were largely unchanged in the ACT (-0.1pc), Victoria and Western Australia (flat in both states).

The only state that saw an improvement in retail turnover was Tasmania (+1.1pc).

The Indian Telegraph
Established in 2007, The Indian Telegraph is a multi award winning digital media company based in Australia.

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