Australian fashion retailers are the major winners leading up to Christmas.
According to the latest figures from the Australian Bureau of Statistics, retail sales grew 17.9% year on year in September with $35.1 billion spent in stores and online.
Clothing, footwear and personal accessories led the charge with a 70.4% year on year sales increase in September, while department stores came in third at 53.6%.
Australian Retailers Association CEO Paul Zahra said the result also marks the ninth consecutive month-on-month rise in retail sales.
“It’s fantastic to see the momentum maintained as we head into the all-important Christmas trading period – a time when many of our discretionary retailers make up to two-thirds of their profits. Despite the challenging economic times, retail spending remains extremely healthy and that’s great news for retail and a positive sign for our broader economy,” Zahra said.
“Whilst there is a lot to celebrate, we are mindful of the impact that inflation and higher prices have on these sales results – with year-on-year comparisons also strongly influenced by the hangover of the Delta lockdowns last year.
“We are cautiously optimistic about the months ahead, and the ARA forecasts a 3% year-on-year increase in Christmas spending. We also know that for many small businesses, the sales are critical in replenishing cash reserves from the pandemic period so these results are truly welcome.
“We are likely to see many Australians bring their spending forward this Christmas, as they aim to get in ahead of inflationary increases, avoid supply issues and secure their gifts well ahead of the Christmas rush.
“We could see a softening of sales as we enter 2023. There is likely to be a lag effect from current inflationary conditions as we see the full impact of interest rate increases flow through the economy, and inflation reaches its forecast peak.
“Overall trading conditions continue to be challenged by supply chain constraints and staff shortages with vacancies continuing to be at record levels."
On a month to month comparison, retail sales increased by 0.6% in September.
National Retail Association Interim Chief Executive Lindsay Carroll said the monthly increase was no surprise as the ABS reported inflation had reached its highest point in 32 years.
“The steady increase of spending in September was again driven by the increasing cost of food and produce, with food retailing at 1 per cent and food services with 1.3 per cent.
“Inflation is now at 7.3 per cent and food prices alone have jumped 9 per cent in the year to September.
“Consumers have had no choice but to adapt to paying the extra costs of their weekly grocery shop that have been pushed up by weather events on the east coast, higher labour and fuel costs and overseas demand for Australian produce.”
“Clothing, footwear and accessories also saw an increase of 2 per cent, compared to a fall of 2.3 per cent in August.
“This shows shoppers are ready to embrace the end of year celebration season with discretionary spending but are likely to be cutting back costs in their own ways.”
Data according to the National Retail Association’s Consumer Sentiment Report released earlier this month showed Australian consumers were prepared to cut back on day-to-day spending to splurge on special events such as Christmas.
“People still want to have those great experiences and are looking for ways to save money in some areas while spending big on the special occasions.
“Retailers are in a position now to guide purchase decisions for savvy shoppers through discounts and special offers,” Carroll said.