Retailers can thank Mother’s Day sales for a rise in retail turnover in May with a 0.7 per cent increase.
According to figures released by the Australian Bureau of Statistics (ABS), shoppers spent more than $35.5 billion across the country in May.
National Retail Association (NRA) CEO Greg Griffith says Mother’s Day promotional sales are responsible for healthier signs of consumer spending.
“The results for May suggest consumers splurge on florists and cosmetic retailers, with other retailing recording the highest trade increase of 2.2 per cent,” he says.
“While Aussies tightened their purse strings in previous months, they seem ready to spend when the occasion arises or when sales promotions are readily available.’’
Most categories including department stores and accessories had moderate to significant growth year on year, however, household goods declined year-on-year by 4.4 per cent, marking six months of negative sales growth.
“We’ve now seen six months of spending decline on household goods and we expect this will be a bellwether for most consumer spending in the months ahead,” Australian Retailers Association (ARA) CEO Paul Zahra says.
“It’s important to remember that cost-of-living pressures typically have a lag effect on retail, which is why we’re seeing a gradual softening in spending. Clothing and department stores are still showing modest growth, but this is mostly driven by early promotional activity and cooler than average temperatures.”
Griffith suggests the 5.75 per cent payroll cost could push inflation higher and weaken retail trade in the coming months.
“The wage increase has dampened any hope of the Reserve Bank pausing interest rates next month, which will further injure consumer confidence.’’
Zahra adds that cost-of-living pressures and a cost-of-doing-business crisis, remains the greatest concern for retailers.
“While we’re seeing a softening in spending, retailers are simultaneously feeling the pressure from increasing operating costs across the board. We are now experiencing a collision between the cost-of-living crisis and a cost-of-doing business crisis.”
