- The quarterly retail volume surged by 6.5% compared to a decline of 3.5% in the previous quarter.
- The robust spending has fueled positive growth in few sectors like cafes, restaurants and takeaway food services which rose by 3.5% in September, in seasonally adjusted terms.
- Stage 4 restrictions in Melbourne and Stage 3 restrictions across the rest of Victoria during the quarter led to negating growth by 4.2%.
- The large businesses have posted a positive growth throughout the pandemic with an average through-the-year increase of 10.9% compared to negative 6.7% growth for small businesses.
- The total online retail sales fell by 1.3% in seasonally adjusted month-on-month terms.
- RBA’s A$100 billion stimulus, slashing of key interest rate to 0.1% from earlier 0.25% earlier, would lead to further growth
On 4 November 2020, the Australian Bureau of Statics released its retail sales report for September 2020.
The Australian spending surged by a record last quarter as the quarterly retail volume surged by 6.5% compared to a decline of 3.5% in the previous quarter. The latest surge in the spending has led to a 4.2% YTD growth, significantly higher than negative 2.1% YTD growth till June quarter.
Image Source: Australian Bureau of Statistics dated September 2020 report
The robust spending in few sectors yielded positive growth with cafes, restaurants and takeaway food services rising by 3.5% in September, in seasonally adjusted terms to $3,307.6 million from $3,194.8 million in August.
Image Source: Australian Bureau of Statistics September 2020 report
Growth from the department stores also increased by 1% in seasonally adjusted terms from $1,479.9 million in August to $1,494.1 million in September.
Due to a spike in the COVID-19 infections, the quarter witnessed Stage 4 restrictions in Melbourne and Stage 3 restrictions across the rest of Victoria. Victoria, which remained under the lockdown for the entire quarter, partly offset the growth by a decline of 4.2%.
Massive disparity between small and large businesses
There has been a significant difference between large and small business in terms of their contribution to growth. The large businesses contributed to almost 73.6% of total retail sales during the pandemic (March to September 2020). If April month is excluded, the large businesses have posted a positive boost through the pandemic with an average through-the-year growth of 10.9%.
Coming to the small businesses, they were able to clock positive progress for only one month (July 2020) through-the-year since the beginning of the pandemic with an average growth of negative 6.7%.
The primary reason for the outperformance of large businesses over the small ones is because larger firms were better placed for the transition to the online channels to cater to the demand. The industry-specific reason was that one of the hardest-hit sectors of the economy, i.e. cafes, restaurants and takeaway food services industry comprised the majority of the small businesses.
Due to the financial position, high-quality management and robust planning, big businesses were able to capture the vast majority of the large increase in sales in some industries.
Online sales had contributed significantly to the economy during the tough times; however, most of the benefit has gone to large businesses. In September, the Pure-play retailers (online only) made up 31.3% of online sales and 3.3% of total sales while the sales from the multi-channel retailers (mix of online and physical stores) made up 7.3% of total retail sales.
The total online retail sales fell by 1.3% in seasonally adjusted month-on-month terms in September 2020, compared to the previous month’s increase of 6.4%.
Recovery on the cards
The numbers are clearly showing the sign of recovery and strength in the consumer spending complemented by the Reserve Bank of Australia’s new round of stimulus of A$100 billion to benefit jobs market and investment. Recently, the RBA had also slashed its key interest rate to 0.1% from earlier 0.25%.
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