Bushfires and Australians’ enthusiastic embrace of the Black Friday sales have hit December’s retail trade hard, with cafes and restaurants particularly affected in a 0.5 per cent monthly spending drop.
The slide is also more grim news for Australia’s embattled retail sector – where thousands of jobs are in jeopardy with an ever-growing tally of closures and failures of big-name chains in recent months.
Seasonally adjusted retail spending fell by $140 million to $27.77 billion in December, according to Australian Bureau of Statistics data released on Thursday.
It was a swift turnaround from a 0.9 per cent rise in November.
However, quarterly retail volumes rose by a seasonally adjusted 0.5 per cent in the three months from October, beating expectations of a 0.3 per cent improvement.
ABS retail quarterly volume trend estimate – even with the November bounce, it's sick pic.twitter.com/vgZZ2dF0Ky
— Michael Pascoe (@MichaelPascoe01) February 6, 2020
Graham Cooke, the insights manager at comparison website Finder, said the outlook for many Australian retailers was bleak.
“While fast-moving consumer goods retailers such as Woolies and Coles will generally continue to operate successfully, clothing and other retailers must adapt or perish,” he said.
“In an environment where people are spending less, and ordering more online – if you don’t have a seat at the table, you might be on the menu.”
In the past few months, Big W, Bose, Curious Planet, Harris Scarfe, Bardot, EB Games, Target and Jeanswest have closed Australian stores. Just this week, handbag and accessories chain Colette by Colette Hayman was the latest to announce it had gone into administration, threatening hundreds of jobs.
Finder said nearly four in five of experts and economists it had surveyed about the state of the retail sector expected more closures to come in 2020.
QUT business school professor Gary Mortimer said it had been an alarming start to the year.
“We saw November sales last year – shoppers spent $800 million more in November last year than they did in November 2018,” he said.
“That $800m has come from somewhere, and I suspect it’s from the December spending.
“There was a lot of spending in November that just pushes the dollars out of December.”
Black Friday, in late November, has taken over from Boxing Day as Australia’s biggest retail day of the year. In 2019, the Commonwealth Bank reported bumper results for department stores, electronics sales and home furnishings, with overall retail spend up 87 per cent on the first day of a three-day consumer spendathon.
Adding to retailers’ woes, Dr Mortimer said, was the overall drop in discretionary spending – while rents and other fixed costs such as utilities kept rising.
“Costs are going up, retailers are relentlessly discounting and you just end up putting yourself out of business,” he said.
“Throughout February and into the start of March, we will see a few more retailers fall over.”
The Australian dollar edged up to 67.57 US cents from 67.52 US cents immediately after the release of the retail figures. It was worth 67.56 US cents at 1140 AEDT.