Covid-19: Retail sales plunge is biggest drop in history

Delta lockdowns triggered the biggest drop in retail turnover in history through the September quarter, but spending has already bounced back after restrictions eased.

Retail trade over the three months to September recorded the largest drop on record thanks to the Delta lockdowns.

The Delta lockdowns on the east coast triggered the biggest drop in retail turnover in history through the September quarter, outstripping even the plunge in sales during last year’s national lockdown.

Driving a 4.4 per cent quarterly drop in sales over the three months was the 12 per cent plunge in retail turnover in NSW, according to the Australian Bureau of Statistics, with stay-at-home orders enforced in the state throughout the entire period.

That compared with a 3.5 per cent countrywide drop in sales volumes in the June quarter of 2020.

Retail sales in Victoria, which was in lockdown for 68 days, dropped by 4.5 per cent. The hit to spending in the ACT was three times that bad – down 13.9 per cent, despite suffering a lockdown that was three days shorter than Victoria’s.

Outside those states, retail sales grew firmly in the quarter.

With more than half the population stuck at home at various times through the quarter, the ABS data also showed that $1 in every $4 spent on non-food retail goods in August and September was online – also a record. Australians spent $4.3bn online in September – more than 40 per cent more than a year earlier.

Confirmation of Delta’s massive blow to consumption in the two most populous states came as bank economists, the Reserve Bank and retailers have grown more confident that a strong rebound in activity had already begun as health restrictions ease.

NAB data in the week to Oct­ober 30 revealed spending by its customers in NSW had bounced back to just above pre-lockdown levels, while the ACT was almost back to where it was before the Delta disruptions.

CBA card spending data revealed a similar rebound.

 

Australian Retailers Association chief executive Paul Zahra said “most discretionary retail stores make up to two-thirds of their profits during the festive trading period, and with the worst of the lockdowns behind us, many businesses will be looking to make up for the substantial trading losses they’ve incurred in recent months and are looking forward to a positive Christmas”.

Economists said the retail figures pointed to a dramatic fall in consumption over the three months to September.

Adjusting for inflation, the 11.6 per cent drop in sales volumes in NSW suggested the state will see a double-digit decline in economic activity for the September quarter when GDP results are published in a few weeks.

The biggest drop in spending through the quarter was in clothing and footwear, which dropped by 28 per cent.