Australian Retail Sales: October 2022 - Cost of living woes starting to bite?
About the author:
- Author name:
- By Alexander Mees
- Job title:
- Co-Head of Research and Senior Analyst
- Date posted:
- 06 December 2022, 8:00 AM
- Sectors Covered:
- Gaming and Retail
- Data from the ABS indicate that retail sales declined month-on-month (m/m) for the first time this year in October 2022. Total retail sales were $35.0bn, down 0.2% m/m from the all-time record in September and up 12.7% year-on-year (y/y). This is the first m/m decline since December 2021. This would suggest cost of living pressures are starting to impact consumer spending.
- Food and Drink (supermarkets, bottle shops) was the only category with a m/m increase in sales (+0.4%), with Department Stores a notable decliner (-2.4%). All retail categories grew positively on a y/y basis with the ‘reopening’ categories of Eating Out, Clothing & Footwear and Department stores the best performing. Food & Drink and Household Goods lagged behind.
Cycling the end of lockdowns in NSW and Victoria October 2021
The best performing categories on a y/y basis were those ‘reopening’ trades that were cycling a period of lockdown in the PCP (October 2021). Leading the way was Eating Out (+35.3% y/y and +46.8% on a 2-year basis).
Within this, Cafés and Restaurants (+51.5% y/y) outperformed Takeaway Food (+14.5% y/y). Clothing & Footwear was up +32.8% y/y, with Clothing slightly outperforming Footwear.
On a m/m basis, Clothing was up 1.7% but Footwear was down 5.0%. ▪ The volatile Department Stores category was the worst performing in October 2022 (down 2.4% m/m), though up +23.0% y/y and +19.3% on a 2-year basis.
Food and Drink the only monthly gainer
Food and Drink increased on a m/m basis in October, the only category to do so, partially helped by high food prices and additional flood related spending. All other categories were down on a m/m basis compared to September 2022.
The lowest growth rate was Department Stores followed by Clothing and Footwear (-0.6%) and Household Goods (-0.5%).
Holding out for Black Friday Sales?
Overall, non-food retailing declined on a m/m basis.
A possible explanation aside from cost of living pressures could be that consumers were waiting for the heavily marketed Black Friday Sales (last Friday of November) and held off spending in October.
Online sales normalise
With the end of lockdowns, online sales have fallen back from a peak of 15.3% in September 2021 to 10-11%.
We believe it could be due to recover its upward momentum.
Figure 1: Online sales as a proportion of total retail sales
Source: Morgans Financial, Company
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