December Sees Widespread Drop in Aussie Retail Sector

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By Published On: February 5, 20190 Comments

After strong sales momentum in November, the Australian sector has suffered through a slow Christmas, with online sale events like Click Frenzy and Black Friday luring customers in well before the calendar ticks into December.

According to the Australian Bureau of Statistics (ABS), retail turnover fell 0.4 percent in December 2018 in seasonally adjusted terms.

Across the month, bricks-and-mortar retailers saw less traffic, with revenue plummeting across the country. The ACT was the worst hit, recording a drop of 1.8 percent, while Western Australia was the only state to see a boost in revenue for the month, clocking positive 0.1 percent.

Online retail turnover was also lower in December than it was in November, as the digital sector contributed 5.6 percent of total retail turnover for the month, down from 6.6 percent in November. The ABS has attributed this drop in performance to “the increasing importance of the November month for online sales”. However, this figure is still an improvement from December 2017, when online sales contributed 4.8 percent of total retail revenue.

This comes after National Australia Bank’s Online Retail Sales Index recorded a 1.4 percent month-on-month contraction in December, after experiencing a 2.9 percent increase in November. This is the first time NAB has recorded a contraction in December since 2016 when the index recorded a drop of 0.1 percent. NAB’s Chief Economist, Alan Oster has attributed this drop in online revenue to increased online activity in November.

“Large online sales events such as Black Friday, Cyber Monday, and Vogue shopping night have contributed to a strong result in November, and may have brought forward some Christmas spending to November. However, given these sales have been part of the online retail environment for some time, it is likely that the weak December read partly reflects underlying weakness in the retail sector,” he said.

This shouldn’t come as a surprise after data from ShopperTrak and Citi Research indicated that in-store foot traffic over the key Christmas shopping period was down by an estimated eight to nine percent, with online shopping events like Click Frenzy instead luring customers online.

Dominique Lamb, the CEO of the National Retailers Association believes this is proof that more support needs to be provided for small businesses.

“Before people start hitting the panic buttons, it should be pointed out that retail sales figures for the entire Christmas trade period were slightly above the 2017 results. Having said that, the December results released by the ABS are well below what was anticipated,” Lamb said.

“Given we are just months out from a federal election, these results should serve as a warning to all sides of politics that parts of the retail sector are struggling as we enter 2019.

“Retail is the second biggest sector in the Australian economy, so when it goes through a challenging period there is a knock-on effect throughout the economy. While the retail community certainly doesn’t look to government for all the answers, it is during slow periods such as these that measures are required that assist small business.”

In the 12-months ending in December 2018, NAB estimates that Australians spent $28.6 billion on online retail, the equivalent of roughly 8.9 percent of all retail sales in the country. During this time, traditional bricks-and-mortar retail generated an estimated $320.1 billion in the year to November 2018.

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