Retail Sales Volumes Fall 0.5% – Are We Back to Pre-COVID Levels?

Power Retail By Power Retail | 10 May 2021

Retail sales volumes have dipped 0.5 percent in March, the ABS has reported – is this a cause for concern?

The drop of 0.5 percent comes after an increase of 2.4 percent in December 2020 – increased by the peak holiday season. Despite the drop in sales volumes, the overall turnover has increased by 1.3 percent in March 2021, seasonally adjusted. It follows a fall of 0.8 percent in February.

As indicated by Ben James, the Director of Quarterly Wide Surveys, these patterns could indicate an end to COVID-influenced shopping behaviour. “The quarterly volume fall was driven by households spending patterns gradually returning to those seen before COVID-19,” he explained.

Clothing, footwear and personal accessory retailing fell by 0.7 percent. Despite this, other retailing recorded an increase of 0.4 percent and department stores also rose by 0.2 percent.

“Victoria (3.5 percent) and Western Australia (5.5 percent) led rises at the state and territory level, following falls in February associated with local coronavirus lockdowns. Queensland (-0.5 percent), which saw a short lockdown at the end of March, partially offset these increases,” said James.

Online currently accounts for 9.4 percent of total retail sales – it made up 7.1 percent in March the year before. So, are we heading back to pre-COVID levels? While the slight drop in sales volume could indicate a worrying sign for retailers, the overall turnover is above the previous month, and online sales continue to capture a larger market share of retail sales.

While the sales figures for March are not as high as December, this indicates a seasonal drop. Power Retail data suggests the typical dip in sales between January and April. This may begin to increase once again when sales are reintroduced between May and July.

“Year on year retail sales growth averaged more than 10% between November 2020 and February 2021, but that’s come down significantly in March, mainly due to the elevated levels of spending we saw last year in supermarkets at the start of the pandemic,” said Paul Zahra, CEO of the Australian Retailer’s Association.

Zahra highlighted that Australians are becoming exceedingly comfortable with online spending, as indicated by the ABS figures in March. “Australians continue to embrace online shopping with sales up 37.4 percent in March compared to the same time last year,” he said.

“There’s no doubt the retail sector is helping to drive Australia’s economic recovery, but more needs to be done to remove the impediments to productivity and growth. The skills shortage is a major issue for a lot of retailers, and with the Federal Government flagging that international borders will remain closed until 2022 – the lack of skilled migrants will remain an ongoing concern for businesses struggling to fill the gap in their workforces.

“The Federal Government has a key role to play in providing training, upskilling programs and incentives to support new and existing workers. There have been numerous announcements about training programs and apprenticeships in recent times, but these are usually geared towards the traditional trades, overlooking retail workers. That’s overlooking retail – Australia’s largest private-sector employer, where one in 10 Australians work. The sector will play an enormous part in our national recovery,” he said.

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