Retail sector notches biggest monthly sales lift on record

A shopping spree in May taking has helped drive the biggest leap in monthly sales in the 38-year history of collecting data.

Shoppers are returning to stores, boosting sales. Picture: David Swift

A shopping spree in May taking in most categories in the $320bn retail sector, from fashion and shoes to cafes and takeaways, has helped drive the biggest leap in monthly sales in the 38-year history of collecting shopping data, with industry insiders suspecting stores have been the beneficiary of a “sugar hit” from pent-up spending during lockdowns.

The rising revenue tide is also being reflected in updates from retailers themselves, which have reported that with people spending more time locked down at home or away from their work they are spending big on items such as hardware, consumer electronics, furniture, homewares and fashion.

According to preliminary retail trade figures released on Friday by the Australian Bureau of Statistics, retail turnover rose 16.3 per cent in May, seasonally adjusted, marking the largest seasonally adjusted rise ever published in the 38 years of the Retail Trade survey. It also follows the largest ever seasonally adjusted fall of 17.7 per cent in April.

These preliminary figures show rises in every industry, with large gains in particular for clothing, footwear and personal accessory retailing and cafes, restaurants and takeaway food services, as restrictions on trade were lifted during May.

However, despite the rises, both these industries remain well down on the levels of May 2019. May retail sales rebounded to be 4 per cent higher than pre-virus levels in February, elevated by a resurgence in clothing sales and eating out.

Australian Retailers Association chief executive Paul Zahra said the anticipated spike in trading in the latest ABS Preliminary Retail Trade Figures reflected suppressed consumer demand following the first month of returned trading after lockdowns.

“While it’s heartening to see the elevated trading in May, it’s certainly too early to see this as a business as usual picture,” Mr Zahra said. “Retailers are still ­experiencing a ‘sugar hit’ from suppressed spending during lockdowns across the previous month and we are conscious that consumer spending is also bolstered by JobKeeper payments.”

Mr Zahra said foot traffic was likely to be more subdued across the winter due to low numbers of tourists, workers and visitors, particularly in city locations.

“Discretionary retailers, particularly those selling clothing, footwear and personal accessories, continue to face difficult ­conditions, with sales slowly returning but still well down on the same period last year,” he said.

“Shopping and entertainment go hand in hand and the increase in customers at restaurants, cafes and pubs will certainly help feed the retail economy.”

Westpac senior economist Andrew Hanlan said consumers were switching their spending habits during the coronavirus pandemic.

“There is a degree of expenditure switching, away from overseas travel, which has stopped and is outside of the scope of Australian retail sales, towards activities closer to home, including retail spending,’’ Mr Hanlan said.

“Beyond these wild swings in spending, the key issue — where to for consumer spending when we move beyond the lockdown and beyond the reopening. Weak income growth and fragile confidence will continue to weigh on the outlook in our view.”

National Retail Association chief executive Dominique Lamb welcomed the sales boom, but said a sizeable rise in sales was guaranteed to happen as shops began to reopen and that the sector was still struggling.

“It’s certainly good news to see retail sales rebound strongly in May and hopefully it’s a sign that we are recovering from the ­economic sledgehammer of COVID-19,” Ms Lamb said.

“However, we do need to remember the broader context. These figures were recorded following the worst month on record in April 2020 and following the easing of business restrictions, so an uptick was to be expected.”

NAB market economist Kaixin Owyong noted that the data well exceeded the bank’s own forecasts as well as the RBA’s feedback that sales had risen “somewhat”.

She added that sales of food and household goods continued to rise, even after the panic buying jump in March. “Food sales rose a further 7 per cent in May from already high levels to 10 per cent above February levels,” she said.