Fashion and department stores across Australia have led a monthly rise of 0.7 per cent in overall retail spending in August 2024, according to new data from the Australian Bureau of Statistics (ABS).
Overall retail spending hit $36.37 billion in August, driven by a $30.4 million lift in department store spending to $1.9 billion, and a $45.7 million lift in clothing, footwear and accessories to just over $3 billion.
ABS reported that the rise in monthly fashion spending was driven by clothing retailing, up by $51.5 million, but was offset by a $5.5 million fall across footwear and other personal accessory retailing.
The overall monthly lift in retail spending in August followed a 0.1 per cent nudge up in July and 0.5 per cent rise in June.
ABS head of business statistics Robert Ewing said retail spending was boosted in August by warmer-than-usual weather for this time of year.
“This year was the warmest August on record since 1910, which saw more spending on items typically purchased in spring,” Ewing said. “This included summer clothing, liquor, outdoor dining, hardware, gardening items, camping goods and outdoor equipment.
“The lift in turnover from the warmer weather was also boosted by higher discretionary spending as consumers took advantage of Father’s Day sales events during the month.”
Retail spending also rose overall in year-on-year terms, up 3.1 per cent, with increases across most industries. Other retailing led the yearly sales charge, up 6.5 per cent - with that category including cosmetics, sports and recreational goods.
This was followed by food retailing at 3.8 per cent, with a 2 per cent and 2.1 per cent rise in clothing, footwear and accessories and department stores respectively.
Following the release of these encouraging results, the National Retail Association warned the Reserve Bank not to use these healthy sales results as an excuse to raise rates when it meets in November.
NRA interim CEO Lindsay Carroll said one month of good sales isn’t enough for businesses to recover from a challenging past couple of years.
“The industry is at the mercy of consumer sentiment; that’s just the nature of retail. Business owners need every win they can get in the lead-up to Christmas,” Carroll said.
“Last year, the Reserve Bank decided to wait until the Black Friday to stifle sales, with an interest rate rise at the start of the holiday shopping season.
“We are asking our policymakers to give retailers some breathing room to recover during this year’s holiday sale season.”
Carroll added that the new ABS data is also an indicator that customers are willing to spend on discretionary items if they serve a purpose, highlighting the warmer weather as a cause for the spending surge.
Meanwhile, Australian Retailers Association (ARA) CEO Paul Zahra is calling for the RBA to lower interest rates when it meets in August, adding that the upcoming peak season is when many discretionary retailers make up two-thirds of their profit.
“Retailers employ thousands of people during the all-important Christmas trading period, providing jobs and boosting the Australian economy,” Zahra said.
“Whilst there is great resilience within retail, we know there are many businesses in the sector that are doing it tough, especially small businesses.
“The RBA needs to offer relief for consumers through a reduction in the cash rate when it next meets in November.”
Zahra said that with difficult economic conditions persisting, retailers have their sights on the upcoming peak season period which includes Halloween, Black Friday and Cyber Monday, and the all-important Christmas trading period.
“Interest rates and cost-of-living pressures continue to impact Australians which is resulting in slowed consumer spending in most categories,” Zahra said.
“Priorities like food and other essentials are seeing modest growth, as is spending on small personal luxuries such as cosmetics, sports and recreational goods.”
“We typically see less spending during the colder months, which is why many retailers are shaking off the shackles of winter, embracing Spring and gearing up for a hopeful festive season – with Christmas merchandise already instore.
“This remains one of retail’s most difficult years – with a continued slowdown in discretionary spend, high business costs along with ongoing challenges such as retail crime, supply chain disruptions, and the most significant workplace relations reforms in decades.”