A year after waves of COVID-19 panic-buying drove a meteoric rise in supermarket sales, IGA Mount Evelyn owner Tony Ingpen is seeing red.
“Sales are down about 10 per cent on last year [when] everyone was in lockdown and people were shopping near home,” Mr Ingpen told TND.
“It’s a pretty good result, to be honest. I don’t like seeing red, but last year was pretty out of the box.”
Supermarkets like Mr Ingpen’s are rapidly adjusting to a new normal after panic-buying led to $3.6 billion of extra food spending in March and April last year.
They were the two biggest months in history. But the tide has now turned.
Food spending plummeted $2 billion this March in annual terms, according to ABS data published on Monday.
Sales of perishable goods in March were down 10.1 per cent year on year, while sales of non-perishable items were down 17.4 per cent.
In any other year, the alarm bells would be ringing.
But Mr Ingpen and other supermarket operators aren’t sweating the fall, because while the sales rush is over, the way we shop has changed forever.
The dollar value of food spending in March was up 8.7 per cent on 2019 levels – far ahead of both inflation and population growth.
And it’s because we are visiting the grocery store much more often than we used to.
Mr Ingpen said customers aren’t just shopping more; they’re also buying more premium groceries, particularly goods produced locally.
“People are just treating themselves at home a little bit more – that extra packet of Tim Tams, or premium ice cream,” the Victorian business owner said.
“We had a choc top, those ice creams you get at the cinemas, [and] they went off.
“It was almost like people wanted that cinema experience at home.”
Spending will soon normalise
Our grocery bills aren’t the only thing outpacing price increases.
Australians spent $666 million more on retail goods in March than during the first month of the pandemic last year.
Overall retail spending levels are up about 12.4 per cent on 2019 levels, something Indeed APAC economist Callam Pickering attributes to the tens of billions of dollars in government stimulus issued over the pandemic period.
“The retail sector has been supported by unprecedented fiscal policy over the last 12 months,” Mr Pickering told The New Daily.
“Retailers are still pushing out a lot of products compared to what they were.”
But it’s probably not going to last.
Economists think spending patterns will return to pre-COVID normalcy sooner rather than later. And there are already signs of that happening.
Retail sales volumes fell 0.5 per cent over the March quarter, with household goods down 1.7 per cent and clothing, footwear and accessories down 0.9 per cent.
Dining out feels the boom
Cafes, restaurants and takeaway food service sales soared 5.8 per cent, because Australians are dining out more.
This helped the hospitality sector surpass pre-pandemic spending levels in March, in dollar terms.
BIS chief economist Sarah Hunter said the data showed Australians were starting to spend more of their budgets on services after shifting to goods during lockdowns.
“The continued opening up of the economy and reduced fears about contracting the disease have led households to increase their spending on services, particularly hospitality and travel,” Dr Hunter said.
“Assuming there are no further widespread COVID outbreaks, this process is likely to continue over the coming months.”
Commonwealth Bank senior economist Kristina Clifton also said the rebound in hospitality spending had some way to go.
“Eating out in the quarter is still running a little below where it was pre-COVID-19 in volume terms, so we are likely to see some further catch up,” Ms Clifton said.
“Indeed, the NSW state government’s Dine and Discover vouchers are likely to provide [a] further boost to eating out in the state.”