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Summary
- The Australian retail sector experienced significant hardship amid COVID-driven lockdowns but picked up steam afterwards.
- The retail sales took some breather in December last year following strong Black Friday sales in November.
- Retailers have an opportunity to build the foundation of a more agile, digital business for the future.
Indeed, the Australian retail sector has been no exception in bearing the burden of stringent lockdown restrictions imposed in the wake of COVID-19 pandemic. However, the sector stood out in hitting the ground running as soon as the nation eased intervention measures and normalcy returned to the markets.
Australia observed a strong month in November 2020 in terms of retail sales, with Aussies taking advantage of huge discounts during Black Friday sales. In November, the retail turnover increased by 7.1 per cent and 13.3 per cent in month-on-month and year-on-year terms, respectively. The relaxation of COVID-19 restrictions in Victoria towards the end of October delivered a much-needed push to the household spending in November.
Nevertheless, the retail sales took a breather in December 2020 following strong Black Friday sales.
December 2020 Retail Data
Preliminary figures from Australian Bureau of Statistics (ABS) suggest that the retail turnover tumbled by 4.2 per cent in December, with falls logged in 5 of the 6 retail industries. Cafes, restaurants and takeaway food services was the only industry to experience a surge in retail sales.
Despite the fall, the retail turnover was 9.4 per cent higher in December 2020 relative to December 2019. Moreover, the ABS noted a 2.4 per cent rise in the December quarter retail sales in seasonally adjusted terms.
It seems that consumers brought forward their Christmas shopping in November to reap the rewards of eye-candy discounts. The new COVID-19 restrictions imposed in Sydney’s Northern Beaches around mid-December also appear to have impacted the household spending.
Promising Outlook
Interestingly, the retail turnover slump in December does not appear to be a sign of a weakening economy after record-high sales in November.
Additionally, the retail sales outlook seems to be encouraging after the release of Commonwealth Bank’s latest figures on card spending. CBA’s data suggests that household credit and debit card spending improved by 8% on a year ago in the week ending 15 January 2021.
A similar uptick has been noted in Westpac Card Tracker Index, which hit a new post-COVID high level in the second week of 2021. The index recorded a sharp 18.7 points jump to 119.3 points over the week to January 9, with the annual growth in card activity running above its pre-COVID pace.
The pandemic also seems to be unfolding a chance for retailers to set up the foundation of a more agile, digital business for the future. Towards this end, retailers may need to step up their plans to boost online sales, adopt innovative tech models and diversify away from brick-and-mortar systems.
All in all, sooner alignment with the new normal and effective e-commerce could help propel the retail industry in the post-COVID era.
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