Thanks to lockdown recovery, Australia records robust retail sales in Dec 2021 quarter

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 Thanks to lockdown recovery, Australia records robust retail sales in Dec 2021 quarter
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Highlights

  • Australians utilised their savings to ease their pent-up demand during the December 2021 quarter.
  • Clothing, footwear, and accessories recorded the largest jump in retail sales during the quarter.
  • The December quarter fared well as consumers turned to retail therapy amid pandemic-induced woes.

The previous year ended on a high note for retailers as Australians indulged generously in retail shopping. As lockdowns eased in October, Australians utilised their savings and pent-up demand to splurge amid the holiday season. The recently released data from the Australian Bureau of Statistics (ABS) on retail sales tell a similar tale.

Retail spending jumped at its highest quarterly level of the series in the December 2021 quarter as consumers spent earnestly on discretionary spending during the year-end. Retail sales rose 8.2% in the December quarter relative to the September quarter, reflecting the strongest quarterly rise on record. Much of this buying frenzy was achieved due to the removal of lockdowns and an overall easing of restrictions during the quarter.

High demand for wearables

In the last quarter, Australians spent their money wholeheartedly on wearables such as clothing, footwear, and accessories. The category recorded the largest jump of 43.1%, followed by department stores, which saw a jump of 25% over the quarter. A major reason why clothing retail took the lead could be the fact that the holiday season was lurking ahead. Many citizens opted for apparels as gifts for friends and family or themselves amid high festive spirits.

Additionally, supply chain concerns seem to have worked in favour of retailers. As news spread about the delays in shipments and large-scale supply-chain disruptions, consumers rushed to the markets just in time to make the most of the stock available for sale. In a way, a series of factors led to these astonishing results, including the buildup of long unfulfilled demand for goods during the lockdown period.

Strong month or strong quarter?

While quarterly results were promising, December retail sales were no match for the sales seen in November. In December 2021, retail sales fell 4.4% month-on-month. Despite the record-high quarterly surge, retail figures have only dwindled since November, with January consumer sentiment being the worst of all recent months.

November sales outshone December retail sales.

However, the December quarter as a whole fared well for consumers, who had fresh opportunities to shop and turn to retail therapy amid pandemic-induced woes. The easing of restrictions created a relaxed environment where Aussies were not afraid to spend open-handedly. Most notably, New South Wales and Victoria recorded the largest volume rises of all the states and territories of 15.3% and 10.2%, respectively.

In addition, regions that had managed to steer clear of any lockdowns showed exceptional strength throughout the quarter. All states and territories showed a rise in retail sales, other than Tasmania, where spending dipped 1.2%. Surprisingly enough, the December quarter gains for discretionary industries were especially significant, given their poor performance during the September quarter.

Overall, most industries benefitted from the rise in retail spending, with food retailing being the only exception. Grocery spending remained subdued as consumers chose to dine out and opted for hospitality venues.

Bottom Line

The December quarter emerged as the perfect example of the modern-day consumer discretionary industry being the consumers’ go-to venue for retail therapy. A mix of highly encouraging factors allowed retail sales to break past records in the December quarter. However, monthly data shows that retail sales seem to be on a swift decline as the festival season takes a break and Aussies get back to their normal way of living.

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