After the panic-fuelled spike in retail sales in March, households took to the retail sector with a hammer, smashing almost one-fifth (17.5%) of retail sales out of the economy and pretty much guaranteeing the recession is in full swing. After the prior month’s rise of 8.5%, the April result was no surprise, causing annualised sales data to record a massive 7.5% fall.
Almost without exception – food and hand sanitiser aside perhaps – retailers could find no safe haven. But there were a couple of exceptions – as we will see later.
The long run data shows there is no similar period with which to compare retail sales in Australia. While bricks and mortar retailers were mainly forced to close or curtail their hours dramatically, the online retailers also copped a pasting in April.
The last decade’s retail sales experience is shown in the chart below.
Fig. 28
To go straight to the dashboard and take a closer look at the data, click here.
Already somewhat in the doldrums under the combined forces of faltering wages growth and low inflation, retail sales have ridden the absurd highs and disastrous lows over the course of March and April. The monthly line (in blue) goes up 8.5% in March, only to be beaten down a massive 17.7% in April. Hard times indeed for beleaguered retailers, who can expect no knight in shining armour to clean their windows anytime soon.
If there is an exception to the rule of retail sales that reigned in March and April (and probably in May for that matter), it is that expenditure related to ‘at home’ consumption is continuing to rise, while out of home expenditure plunged in April.
This included expenditure on homewares, but in particular, on electronics, furniture and garden and homewares. Data from Zip (a post-purchase-payment provider) confirmed this was continuing through to the end of May as social-distancing and isolation requirements continued.
For the period to the end of April, we can see this in the chart below, for two sectors of particular reference, Hardware, Building and Garden Supplies and Furniture, Floor Coverings and Homewares.
Fig. 29
To go straight to the dashboard and take a closer look at the data, click here.
We can see that while sales of Hardware, Building and Garden Supplies shot up for a second successive month (+17.9% in March and +25.6% in April), the declines for the Furniture, Floor Covering and Homewares category were forced in the opposite direction (-4.8% in March and -11.5% in April).
The Australian economy is going to face quite a bit of this uncertainty and sectorally different behaviour in coming months and even years. While there are mixed signals at the detailed level, we cannot escape one key fact: Australia’s retail sales habits have altered significantly in the last few months.
The question is what they will return to, as much as when that will occur.
