Retail slump has us shopping like it’s 1995

It may turn out to be a very daggy downturn, with Australians spending as little on clothing as we were in 1995, when our population was just 18 million.

Claudia Schiffer modelling for Valentino’s summer 1995 collection.

It may turn out to be a very daggy downturn, with Australians spending as little on clothing as we were in 1995.

Retail trade plunged 17.7 cent in April, according to final figures released by the Australian Bureau of Statistics on Thursday, confirming the worst-ever monthly fall, as the nation was in the depth of the COVID-19 lockdown.

The final figures compare with the preliminary figures released late last month which showed a 17.9 per cent fall for April

The latest seasonally adjusted figures followed a jump of 8.5 per cent in March as shoppers were in the midst of panic buying.

The horror months saw record falls in cafe, restaurant and takeaway food sales, with the sector dealt 35.4 per cent reduction.

Clothing footwear and personal accessories were smashed, down 53.6 per cent, with a smaller reduction seen in sales in department stores where sales fell 14.9 per cent.

APAC Economist Callam Pickering said the last time Australia spent so little on clothing was in 1995, when Australia’s population was 18 million.

“The outlook for retail is highly uncertain and sensitive to a range of factors. High savings and lower incomes have always been a troubling combination, for both the retail sector and the economy more broadly,” he said.

“Households are likely to be cautious about their job security and the economic outlook, and it is unlikely that they will spend as they did pre-crisis. Meanwhile, elevated unemployment, even after lockdowns are lifted, will naturally weigh on wage growth throughout 2020 and beyond.”

In seasonally adjusted terms Victoria was the worst hit state, where sales fell 21.1 per cent, while the Northern Territory – the area of Australia least affected by COVID-19 saw only a 7.7 per cent backsliding in sales.

New South Wales came in second place for worst affected, where sales collapsed by 17.5 per cent, followed respectively by Tasmania, West Australia, Queensland and South Australia.

However online sales rose, with an 11.1 per cent increase in sales over April, following a 7.1 per cent rise in March.

But these sales failed to make up for the crushing blow inflicted by the COVID-19 lockdown, with online sales making up only 5.7 per cent of total retail sales.

Online sales were estimated to have been worth 2.7 billion in April.

Commsec Economist Craig James said the latest ABS data showed the economic volatility that was being created by the coronavirus lockdown.

“It’s likely we’re going to see retail spending bouncing around for a few more months yet,” he said.

“The good news story is that consumer confidence is lifting, it’s up for nine consecutive weeks.”

Mr James said the strength of online sales was likely to increase the speed of the pivot from many retailers to online.

“We’re seeing online retail as a share of total retailing as being fairly consistent around 5-6 per cent,” he said.

“That may lead to some strategic decisions by retailers in coming months, around what proportion of their sales marketing will continue to be focused on bricks and mortar compared to online spending.”

Australian Retailers Association CEO Paul Zahra said Thursday’s ABS figures confirmed the severe impacts of the lockdowns and showed significant pain for the industry was coming.

“As restrictions lift, we are encouraged to see Australia’s retail community shifting out of crisis towards recovery. Having confirmed that we are already in an economic recession, by all measures this recovery will be slow,” said Mr Zahra.

“Despite early reports of positive trading in May, we project significant financial difficulties will continue for retailers. In particular, we predict that the remainder of winter trade may at a top-line be robust, however profitability will be a concern, which may force a number of retail closures.”