Long summer brings mixed bag for retailers

An unusually long summer has clobbered clothing sales but prompted a splurge at cafes and restaurants.

Cafes were some of the luckier retailers cashing in on Australia’s long summer this year.

An unusually long summer has clobbered clothing sales but prompted a splurge at cafes and restaurants, leaving overall retail spending higher than economists had expected in April.

Monthly retail sales rose a seasonally adjusted 0.4 per cent to $26.56 billion between March and April, a level 2.6 per cent higher than the same time last year, the ABS said yesterday.

“While industries including cafes, restaurants and takeaways can benefit from warm weather, there were likely negative impacts for some businesses including clothing, footwear and personal accessories and department stores,” the Australian ­Bureau of Statistics said.

“Some of this weakness could prove temporary as it may partly reflect shoppers delaying the purchasing of autumn clothes following the unusually hot weather in some capital cities in April,” said Capital Economics economist Kate Hickie.

GRAPHIC: Retail sales

Clothing sales fell 1.5 per cent over the month to April, the second monthly fall in a row; spending at department stores dropped 1.5 per cent.

Cafe, restaurant and take­aways rose 1.3 per cent over the month, more than any other category, ahead of food retailing (the biggest category, at 41 per cent of total spending), up 0.3 per cent, and household goods, up 0.7 per cent, which includes hardware, building and garden supplies, furniture and floor coverings.

“The Commonwealth Games on the Gold Coast failed to provide a gold medal boost to retail spending, with sales rising by just 0.1 per cent over the month in Queensland,” Ms Hickie said.

Retail sales growth was strongest in the non-mining states. They fell 0.6 per cent in South Australia — the worst performing state — while they rose 0.7 per cent in NSW and 0.3 per cent in Victoria, respectively, leaving annual growth in those states at 3.6 per cent and 4.7 per cent, respectively.

“The tone in this month’s ­retail report is slightly better than expected but there are still clear areas of weakness,” said Westpac economist Matthew Hassan.

“Household finances (are) still under pressure from low wage growth, rising petrol prices and a slowing housing market, (and) we expect the annual rate of consumption growth to slow from about 3 per cent in the first quarter to around 2 per cent by the end of the year,” Ms Hickie said.

The retail figures come ahead of the release this week of the ­national accounts for the first quarter of the year, which are expected to show continued weakness in household spending.

Monthly online retail sales surged $510 million to $1.34bn over the year to April, and make up about 5.5 per cent of the total.

“The entry of new competitors, most notably Amazon Australia, has undoubtedly acceler­ated this shift,” Mr Hassan said.

Barclays economists said: “Continued expansion of e-commerce platforms such as Amazon in Australia could have some negative impact on sales of traditional brick-and-mortar shops and prices, in our view, as the share of online sales increases.’’