Australian retail sales continued to fall with state lockdowns restricting household spending. Sales in August were down a further 1.7%, taking the overall decline since the emergence of the Delta outbreaks to 6%. Lockdowns are hitting non-essential retail hard, though the stay-at-home restrictions continue to see online sales soar while also boosting food and liquor spending.
Retail Sales — August | By the numbers
- National retail sales declined by 1.7%m/m in August, in line with the preliminary estimate, to $29.3bn. This followed declines of 1.8% in June and 2.7% in July, with turnover down 6% since May.
- Annual turnover growth remained negative at -0.7% but eased from the -3.1% pace in July.
Retail Sales — August | The details
Lockdowns in New South Wales, Victoria and the ACT drove national retail sales lower again, falling by 1.7% in August. This takes the contraction in retail sales over the Delta period to 6%, though if basic food (which benefits from lockdowns) is excluded, turnover on that basis is down 14.2% since May and is at a 16-month low.
The category detail reflected lockdown effects, with areas benefitting from stay-at-home orders rising while those impacted by trading restrictions fell sharply. Food sales lifted by 2.1%m/m, supported by a boost in spending at supermarkets (2.1%) and liquor stores (5.3%). There were also gains in the month seen in some familiar lockdown-supported sub-categories including hardware and gardening supplies (3.6%) and pharmaceuticals (2.1%).
But the major beneficiary from the Delta lockdowns has been online sales with the 15.1% rise in August following gains of 16.8% in June and 14.2% in July in a surge similar to that seen at the outset of the pandemic. Since May, online sales have soared by 53.5% with gains over the period of 59.1% in non-food sales and 39.6% in food sales.
Due to closures and capacity restrictions, clothing and footwear sales (-15.7%m/m) and spending at cafes, restaurants and takeaway outlets (-7%m/m) plunged to mid-2020 lows, while turnover at department stores (-10.2%) collapsed to the level seen during last year's national lockdown.
In comparison to the national lockdown in March-April 2020, spending patterns have shown similar trends in the Delta lockdowns, albeit generally less pronounced this time around. Adhering to this has been spending at supermarkets, liquor stores, and at pharmacies. Hardware sales have not seen a clear boost as in 2020, with the nation's major retailer in this space more affected by in-store restrictions through the Delta period. Electrical goods surged at the start of the pandemic as people prepared for work and school from home and upgraded their in-home entertainment. With that once-off spending out of the way, there has not been another surge in 2021, but there has been no marked drop-off either. As discussed earlier, the acceleration in online spending has been something to behold, continuing to soar to new record highs as restrictions persist.
With lockdowns extended or enacted, retail sales fell sharply in the month in the ACT (-19.9%), New South Wales (-3.5%) and Victoria (-3.0%), with the first two back below pre-pandemic levels. Across the other states, a 6.6% reopening rebound occurred in South Australia, while the pace in Western Australia lifted to a 2.8% rise. Sales in Queensland fell by 0.9% for the third month running with the weakening momentum coinciding with localised Delta outbreaks, while Tasmania posted a 1.1% fall in August.
Retail Sales — August | Insights
Tightening and extending lockdowns in response to the spread of the Delta variant has driven retail sales sharply lower since May. Some of that weakness has been attenuated by the boost to food sales due to the stay-at-home restrictions, while online sales have soared as a substitute for not being able to be out and about. Overall, there have been similar, though mostly less pronounced, shifts in spending patterns in the Delta period to that seen at the outset of the pandemic. High-frequency data tracking foot traffic at Australian retailers suggests spending firmed slightly in September, though based on the state reopening roadmaps, restrictions on non-essential retail are likely to persist until later this month or into early November.
