Australian retail sales figures suggest challenging period ahead
Australian retail turnover has continued to grow through June. The Australian Bureau of Statistics reported a 0.2 per cent increase – the industry’s sixth consecutive month of growth.
National Retail Association (NRA) Chief Executive Dominique Lamb said the slight increase was expected as the nation continues to adjust to inflation and rising interest rates.
“On the surface the numbers show the sector performing well but, underneath, we know the rise in turnover is directly attributable to the rising cost of goods and services.
“Retail businesses have a challenging period ahead as rising interest rates and rising costs of groceries are impeding sales volumes. The impact of interest rate hikes will come to a head for many family-run and small business operators, who are struggling to keep up with the rising costs of business and dwindling consumer confidence.”
The lipstick effect
Across the subsectors of the retail trade, dining and food services saw a noticeable growth of 2.7 per cent. The NRA sees this as a result of the industry passing on price increases to consumers to cover the costs of doing business. Clothing, footwear and personal accessories saw the second highest growth of 1.3 per cent. Lamb attributes this to the lipstick effect, where consumers who can’t afford big-ticket items treat themselves to small luxuries, such as a new lipstick.
“Consumers are riding the waves of inflation in their own way,” she said. “Some are steering clear of discretionary spending while others are treating themselves where they can. However, taking into account the consumer price index rise of 1.8 per cent, we will see consumers spending less in the coming months.
“Small businesses need to see more support from the government to get through these low spending periods and the NRA will continue to advocate on this matter to ensure our local and family-owned businesses stay alive. Decision makers need to be aware that there are thousands of small businesses who are still doing it tough, despite the supposed growth in revenue for the industry.”