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Finance Consumer Record plunge in retail spending amid virus lockdowns Updated:

Record plunge in retail spending amid virus lockdowns

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Retail spending fell by a record 17.7 per cent in April amid strict coronavirus restrictions, indicating the depth of weakness in household spending expected over coming months.

The Australian Bureau of Statistics marginally revised its preliminary estimates of retail trade for April, saying sales fell by 17.7 per cent from March, instead of 17.9 per cent.

The fall came after retail sales rose by a record 8.5 per cent in March as households stockpiled goods.

Compared with April 2019, retail trade was down 8.2 per cent.

Lockdown measures caused a big shift in spending patterns in April, official figures show, with e-commerce sales soaring 26.4 per cent to $2.7 billion.

Online sales made 11.1 per cent of total retail sales, up from 7.1 per cent in March, when online sales rose 23.5 per cent from February.

In April 2019, online sales were just 5.7 per cent of total sales.

“While some of this is likely to shift back to instore as restrictions are lifted, we expect some of this change to become permanent,” said BIS Oxford Economics chief economist Sarah Hunter.

Online sales made up 20.5 per cent of sales of household goods, clothing and footwear, the ABS announced on Thursday.

For April, there were record falls in cafes, restaurants and takeaway food services (down 35.4 per cent), clothing, footwear and personal accessory retailing (down 53.6 per cent), as well as a large fall in department stores (down 14.9 per cent).

Food retailing led the fall in dollar terms, sliding 17.4 per cent from March, when there was a record rise as households stockpiled goods.

Spending on food was still up 5.1 per cent from a year ago as more meals were consumed at home.

Spending on clothing, footwear and personal accessory plunged 53.6 per cent.

“Retailers in discretionary categories are facing significant challenges, with yesterday’s GDP figures a preview of falls in discretionary goods,” Australian Retailers Association CEO Paul Zahra said.

“The majority of our retail members have now reopened for business. Despite early reports of positive trading in May, we project significant financial difficulties will continue for retailers,” he added.

NAB economist Kaixin Owyong said that while the data showed the lockdowns had “a massive impact on discretionary spending,” NAB’s measure of weekly consumer spending suggested that activity began to pick up in late May.

She is predicting a sizeable bounce in sales would be visible in June data.

National Retail Association chief executive Dominique Lamb said the figures emphasised Federal Treasurer Josh Frydenberg’s remarks on Wednesday that the country was in its first recession since 1991 and reiterated the need for the sector to continue receiving support from government.