Fashion sales have driven an overall retail bump up of 1.1 per cent to $35.7 billion, according to new data from the Australian Bureau of Statistics (ABS), but retailers are unimpressed by the rebound.
ABS head of retail statistics Ben Dorber said the overall sales lift in January follows a fall of 2.1 per cent in December 2023, "when consumers pulled back on spending after taking advantage of Black Friday sales in November."
“Retail turnover is now back at a similar level to September 2023.”
Dorber added that retail turnover was unchanged in trend terms in January.
“This means there has been no growth in retail turnover when we look through the volatility of the past few months.
“Rather, spending patterns have shifted because of changes in seasonality around Black Friday as consumers took advantage of discounting in response to cost of living pressures.”
National Retail Association director Rob Godwin said while data reveals that retail turnover has stalled, population growth and increasing costs of doing business show retail growth has actually fallen in real terms.
“At face value, the 1.1 per cent increase looks positive for a traditionally slow month but factoring in Australia’s accelerating population and disappointing December sales reveal retail growth has actually gone backwards,” Godwin said.
“Income from the festive season is usually the pot of gold at the end of a hard year for retailers, but poor sales have forced businesses to carry the cost of sales into January.”
Sales within the clothing, footwear and personal accessories sector surged by 2.4 per cent to $2.93 billion in January. This is a lift of $69.3 million on the prior month and follows a decline of 1.6 per cent recorded in December 2023 compared to November 2023.
The lift in fashion sales in January is joined by a 2.3 per cent lift in household goods retailing, and a 1.7 per cent lift in both department stores and other retailing.
In year-on-year terms, Australian retail sales increased by 1.1 per cent, matching the monthly change.
In the same turn, fashion sales dropped by 1.7 per cent, alongside household goods - down 1.4 per cent - and department stores down 1.3 per cent.
Australian Retailers Association (ARA) CEO Paul Zahra said the biggest discretionary categories suffered declines as Australians tightened their purse strings amid the cost-of-living crunch.
“Shoppers are continuing to feel the impact of the cost-of-living challenges and interest rate increases, making it a difficult time to be a discretionary retailer,” Zahra said.
Most states and territories recorded growth year-on-year, led by Tasmania and Northern Territory which were both up 2.8 per cent. Queensland came third at 2.6 per cent, with South Australia up 2.2 per cent, Western Australia hitting 1.8 per cent, ACT up 1 per cent and Victoria lifting by just 0.8 per cent.
New South Wales recorded a spending decline of 0.3 per cent.
Zahra said the Reserve Bank of Australia’s next monetary decision on March 19 will have a significant bearing on the trading months ahead.
"Inflation is trending downward and retail spending has softened significantly, which we hope will encourage the RBA to pause interest rates again, with the aim to lower them at some point this year.”