The upswing in Australian retail spending coming out of the national shutdown was paused in August as the reopening in Victoria went into reverse following a second wave of virus infections and this had spillover effects on confidence across the rest of the nation. However, even after falling by 4% in August, the level of retail turnover is still 6% higher than prior to the onset of the pandemic, boosted by fiscal and monetary stimulus, early access to superannuation, loan and rent deferrals, and shifts in consumption patterns away from services and into goods due to ongoing activity restrictions.
Retail Sales — August | By the numbers
- Retail turnover (nominal) declined by 4.0% in August to $29.481bn, slightly less severe than the preliminary and market estimate of -4.2%. Turnover advanced by 3.2% in July that coincided with the second of two $750 Economic Support Payments from the Federal Government to eligible Australians.
- Annual growth in retail turnover slowed from a 20-year high 12.0% to 7.1% in August.
Retail Sales — August | The details
For the first time since the national shutdown, monthly retail sales declined with a 4% fall in August. Though it lost a bit of momentum on this result, the upswing since the reopening remains well and truly intact with the level of retail spending in August around 6% higher than prevailed immediately before the pandemic emerged. The main factor that contributed to the decline in August was the impact of the shutdown in Victoria that accounted for $0.93bn of the $1.22bn fall in the national figure of $29.48bn.
Spending in Victoria declined by 12.6% in August to $6.47bn. Even incorporating the 2.1% decline in July, the impact of this second lockdown has been much less severe than the 21.1% fall (-$1.65bn) that came through in the state back in April following the implementation of the national shutdown. Excluding Victoria, turnover on a combined basis across the other states and territories fell by 1.3% in August and given that consumer confidence weakened sharply in that month (-9.6% according to the Westpac-Melbourne Institue's index), this would seem to suggest that the level of precautionary behaviour increased.
The composition of spending in August saw broad-based weakness coming through across the categories, particularly in non-food sales (-6.7%), which as a proxy for discretionary demand would support the notion of precautionary behaviour picking up following the Victorian situation.
Furthermore, with Victorians unable to access the shops in person and health-related concerns evident elsewhere in the nation, online spending lifted strongly in August (7.0%) following on from a robust increase in July (6.3%). Combined with the fall in total retail turnover in August, spending through online channels as a share of total spending accelerated to be at a near-record high of 11.0% from just below 10% over June and July. The record figure of 11.1% occurred in April during the national shutdown.
The following chart shows how the level of spending across each of the major categories is tracking from a February (pre-pandemic) baseline. As its stands after August, 3 categories are below baseline; cafes and restaurants (-18.7%), department stores (-6.7%) and clothing and footwear (-4.9%). Last month, cafes and restaurants were the only category below the level from February. Online has been the major beneficiary of the impacts on shopping behaviour following the onset of the pandemic rising to almost 68% above its February 2020 level.
Retail Sales — August | Insights
