Supermarket sales jump won’t last

There was an 8.2 per cent leap in total retail sales for March and a massive increase of 22.4 per cent for grocery and supermarkets.

Supermarket sales have surged due to panic buying spurred by the coronavirus crisis

Not even during the heat of the global financial crisis, when shoppers’ wallets and purses were overflowing with free cash from the Rudd government, did retailers enjoy such a boost to their sales and in such a short period time.

Back then in those anxious days of bank collapses and fears of a looming recession it was plasma televisions, liquor stores and the pokies that did the best from the federal government’s cash splash.

This time it is different. Even before the federal government started throwing money from a helicopter consumers were thrust ing their own money into cash registers but instead of consumer electronics or a flutter at the pub it was a rush to the supermarkets as trolleys and baskets were filled to bursting.

An early glimpse into the spending frenzy over February and March has been provided by the Australian Bureau of Statistics, which showed record retail sales in February and now another burst in March to post some of the biggest single-month gains since the ABS began reporting retail sales.

The statistics showed a 8.2 per cent leap in total sales for March and a massive increase of 22.4 per cent for grocery and supermarkets. National Australia Bank’s cashless retail sales index for March 2020 showed the supermarkets and grocery category year-on-year growth lifted by 35 per cent, with liquor and other specialised food up by 40 per cent and hardware up by 20 per cent.

The nation’s leading chains, Woolworths and Coles, will provide greater clarity on this selling bonanza next week when they release their third-quarter sales performance, and everyone is expecting both supermarkets to post record-setting sales leaps for the quarter.

But there is a transient nature to these sales booms for the supermarkets. Australians now have pantries full of canned food — much of which they probably bought in a panic and would never ever eat unless they were desperate — while it is estimated that Australian homes are now sitting on a year’s worth of toilet paper. So many of these sales have been pulled forward and the supermarkets, and other retailers that have enjoyed a feast in February March, might face somewhat of a famine in the following months as shoppers deplete the stocks they already have at home.

It’s this kind of retreat in sales over the next few months that leading retail industry groups are now warning about.

The National Retail Association said on Wednesday that while the Australian Bureau of Statistics preliminary retail trade figures for March represented the largest jump in sales on record, it would be followed by a massive fall in turnover from April onwards.

NRA chief executive Dominique Lamb said that the March preliminary figures needed to be put into context given the impact COVID-19 has had since then.

“March saw the peak in panic buying in supermarkets, particularly for items such as toilet paper, rice and pasta. (Wednesday’s) report also shows a nosedive in sales for cafes, restaurants, takeaway food services, and clothing,” Ms Lamb said.

“April will be the first full month to incorporate the full extent of the lockdown restrictions, social distancing and the scaling down of services for cafes and restaurants. Retail is therefore bracing itself for very sobering results for April onwards.

“It would also seem that the panic buying peak is behind us, so supermarkets are likely to see a downwards correction in their sales from now on.”

Australia is in uncharted waters. Certain online stores might be booming, liquor especially, but empty stores and people sent home with no pay cannot be good for the $320bn retail sector.