Clothing, footwear and accessories sales dropped by 4.3 per cent in March 2024 compared to the prior month, and 0.4 per cent compared to March 2023.
This is according to new data from the Australian Bureau of Statistics (ABS), which shows that fashion is the leading retail category recording a sales slump for the month, and the second-largest percentage drop in year-on-year terms.
Department stores recorded the second-largest drop of 1.6 per cent month-on-month, followed by household goods at 1.4 per cent.
According to ABS head of retail statistics Ben Dorber, the drop in both fashion and department store categories comes following large rises in the month prior, which was driven by a Taylor Swift boost in turnover.
In year-on-year terms, department store sales are down 0.3 per cent, while household goods are down 3.1 per cent.
Meanwhile, other retailing – including cosmetics, sports and recreational goods – saw the strongest growth in March year-on-year, up 2.4 per cent, with monthly sales down just 0.3 per cent.
The only category recording a rise in monthly retail sales was food retailing, up 0.9 per cent.
Overall, Australian retail turnover fell 0.4 per cent in March 2024 to $35.6 billion, following a rise of 0.2 per cent in February and a larger rise of 1 per cent in January.
“Consumers pulled back on retail spending in March as cost of living pressures remained high,” Dorber said.
“Underlying retail turnover has been flat for the past six months and was up only 0.8 per cent compared to March 2023. Outside of the pandemic period and introduction of the GST, this is the weakest growth on record when comparing turnover to the same time in the previous year.”
According to the Australian Retailers Association (ARA), retail sales remained subdued in March 2024, with a modest increase of just 0.8 per cent compared to the same time last year.
ARA CEO Paul Zahra said this is despite Easter celebrations, holiday spending and the additional one million Australians spending over the easter break compared to the previous year.
“In previous years, Easter has occurred in April – this year we celebrated Easter at the end of March which helped prevent overall trading from falling into decline,” Zahra said.
“Australians are still cutting back on spending as the lag effect of interest rate rises continues to take hold. While food spending remains constant, there has been a shift towards more affordable and value-oriented products in recent months.”
Zahra added the discretionary categories are being hit the hardest, noting particular drops in household goods, fashion and department stores. And this is despite mid-season sales commencing earlier due to Easter.
“The ongoing cost-of-living pressures and interest rate ramifications are making it a challenging period for those in the discretionary retail sector,” Zahra said.
“Whilst we are hopeful of a rate cut in the near future, for retailers we anticipate the pressure of a slowdown in discretionary spend coupled with cost of doing business pressure, remaining in place for most of this year.
“More than 6 million Australians are paying mortgages, and this remains the biggest financial stressor for these households.
“Whilst interest rates remain elevated, discretionary spending will suffer.”
Meanwhile, the National Retail Association is calling on the Federal Government to address the cost-of-trading crisis amid the latest ABS release.
National Retail deputy CEO Lindsay Carroll said any momentum gained by Taylor Swift’s concerts was undone in March.
“Retailers selling discretionary items are most at risk of exiting the market and are using any boost in sales as a life raft into the next month,” Carroll said.
“Businesses are struggling with unprecedented rent increases, skyrocketing power prices and insurance, and the Government’s May Budget is fast becoming a beacon of hope for many shop owners.
“High interest rates and low consumer confidence have pushed retailers into a cost-of-trading crisis, putting Australia’s second-largest employer at risk.
“We call on the Federal Government to put downward pressure on energy and insurance costs so retailers suffering from scarce consumer spending can keep more of what they earn.”
Ms Carroll said states that enjoyed a Swift kick to trading last month suffered a comparatively worse decline in March, with Victoria and New South Wales falling by 0.8 per cent and 1.1 per cent respectively. While non-tour states, including Queensland (0.4 per cent) earned a slight comeback.
“77 per cent of Australian businesses project their overheads to worsen through the year, so any sugar hit to retail sales is likely to be lost soon after it’s earned.
“The May Budget gives the Federal Government the opportunity to address skyrocketing energy and insurance premiums and take excess pressure off Australian businesses, the lifeblood of our economy.”