In October 2023, Australian retail turnover experienced a decline of 0.2%, as revealed by seasonally adjusted data released today by the Australian Bureau of Statistics (ABS).
This downturn follows increases of 0.9% in September 2023 and 0.2% in August 2023. According to Ben Dorber, ABS head of retail statistics, the dip in retail turnover in October can be attributed to a temporary surge in spending observed in September. Dorber stated, “Turnover decreased across all retail categories except for food retailing. It seems consumers paused discretionary spending in October, likely holding off for Black Friday sales events in November—a trend observed in recent years as Black Friday sales gain popularity.”
Notably, food retailing experienced a positive trend, recording a 0.5% increase this month. Conversely, all non-food retail industries saw a decline in October, reversing the gains from the previous month. The largest fall among non-food industries was in clothing, footwear, and personal accessory retailing (-1.0%), followed by household goods retailing (-0.6%), department stores (-0.6%), and other retailing (-0.4%). Cafes, restaurants, and takeaway food services also experienced a second consecutive decline (-0.4%). Dorber commented, “Spending in these establishments has slowed recently due to rising food prices and cost-of-living pressures, bringing it back to a level similar to that seen in July 2023.”
The growth in retail turnover showed a varied pattern across the country, with five states and territories witnessing a decrease. Victoria (-0.8%), New South Wales (-0.5%), and the Australian Capital Territory (-0.5%) each reported their first monthly decline in retail turnover since June 2023.
CreditorWatch’s Chief Economist, Anneke Thompson said: “Retail sales fell an overall 0.2 per cent over the month of October, after recording rises in spending in both preceding months. For discretionary goods categories, this is to be expected, as many consumers will have chosen to hold off on spending for Black Friday sales, which are currently in progress. We expect that all categories of goods spending will see a good lift in spending in November due to these sales, following patterns that have emerged in recent years.”
“The area of spending that is not impacted by Black Friday, cafes, restaurants and takeaway food services, recorded a second straight fall in spending, after bucking the trend in other discretionary categories for many months. Spending in this category fell by 0.4 per cent and is now back to July 2023 levels. This indicates that consumers have finally started to pull back on dining out, in the face of cost-of-living pressures and rising interest rates.
“What is concerning is that this sector already well and truly tops the rankings for external administrations by Industry. In the 12 months to December 2023, one in 100 food and beverage services businesses went into external administration. There are now rising headwinds in this sector, as demand falls, the ATO calls in large GST and other tax debts, and labour, rent and energy costs all continue to rise. The food and beverage sector is also the second highest ranked industry for payment arrears (behind construction), with 9.3 per cent of total invoices more than 60 days in arrears.”
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