Fashion and department stores have driven down an overall slump in retail sales of 2.7% in December 2023 compared to the prior month, Australian Bureau of Statistics (ABS) data revealed.
This follows a revised rise of 1.6% in November 2023 and a fall of 0.2% in October 2023. Revisions to seasonally adjusted data are larger than usual this month according to the ABS, reflecting improvements in the data as the evolving seasonal pattern becomes clearer.
The 2.7% slip in overall retail was driven by a 5.7% drop in fashion sales and an 8.1% drop in department store sales. These came after lifts of 2.2% and 4.1% respectively in November 2023.
The largest drop was recorded in household goods retailing, at negative 8.5%.
ABS head of retail statistics Ben Dorber said the large fall in overall retail turnover in December was caused by a fall in discretionary spending.
“Consumers brought forward some of their usual December spending to November to take advantage of Black Friday sales,” Dorber said.
“This shift in spending from December to November reflects the growing popularity of Black Friday sales and the impact of cost-of-living pressures, with consumers seeking out bargains and taking advantage of discounts in November.
“While there was a large seasonally adjusted fall in December, retail turnover rose 0.1% in trend terms. This shows that underlying retail spending remains subdued when we look through the volatile movements over recent months in the lead up to Christmas."
According to Dorber, retailers had told the ABS that trading conditions were slow in early December following the success of Black Friday, before picking up again in the lead up to Christmas and Boxing Day sales where discounting activity returned."
On a yearly basis, December 2023 retail sales grew by 0.8%, with fashion and department store sales lifting by 0.5% and 3.7% respectively. Total retail sales were $35.18 billion in December 2023, with fashion hitting $2.8 billion and department stores at $1.8 billion.
National Retail Association director Rob Godwin said the disappointing holiday sales season and cost-of-living pressures have forced retailers of all sizes to either let go of staff or close-up shop.
“The parched figures show that consumers had no money left to spend after Black Friday and Cyber Monday sales,” Godwin said.
“The RBA’s decision to raise interest rates in November was a step too far in beating down spending, giving retailers little hope for December sales after November’s flat result.
“Now that spending has all but stopped, we ask that they start cutting interest rates at their monetary policy meeting next week.”
Australian Retailers Association CEO Paul Zahra said Australia isn’t seeing the year-on-year growth reported in previous years
“Department stores fared particularly well, capitalising on the Boxing Day sales and the final few weeks before Christmas with a range of promotional events,” Zahra said.
“With high interest rates and increasing costs for families, we’re continuing to see a softening in discretionary spending.”
Zahra said next week’s decision by the Reserve Bank of Australia will have significant bearing on the trading months ahead.
"We’ve seen reduced spending growth in December. Another interest rate increase would be crushing for retailers.”