Australian retailers continued to face slow discretionary spend throughout the month of August, despite a modest uptick in consumer spending compared to the same time last year.
The latest retail spend data from the Australian Bureau of Statistics (ABS) revealed growth of 3.1% compared to August last year, with retail spending total $36.475 billion nationwide, compared to $35.376 billion in August 2023.
Australian Retailers Association (ARA) CEO Paul Zahra said it’s important the RBA provides relief for consumers in the lead up to the peak season, where many discretionary retailers are dependent on making up to two-thirds of their profit.
“Retailers employ thousands of people during the all-important Christmas trading period, providing jobs and boosting the Australian economy,” Mr Zahra said.
“Whilst there is great resilience within retail, we know there are many businesses in the sector that are doing it tough, especially small businesses.
“The Reserve Bank of Australia (RBA) needs to offer relief for consumers through a reduction in the cash rate when the RBA next meets in November.”
ABS category ‘Other retailing’ – which includes cosmetics, sports and recreational goods – saw the strongest growth in August (up 6.5 % year-on-year) along with the staple category of food (up 3.8%). Clothing, footwear and accessories (up 2.0%), Department stores (up 2.1%) and Household goods (up 1.4%) all showed marginal growth. Cafes, restaurants and takeaway services rose slightly (up 0.5 %) year on year.
Mr Zahra said that with difficult economic conditions persisting, retailers have their sights on the upcoming peak season period which includes Halloween, Black Friday and Cyber Monday, and the all-important Christmas trading period.
“Interest rates and cost-of-living pressures continue to impact Australians which is resulting in slowed consumer spending in most categories,” Mr Zahra said.
“Priorities like food and other essentials are seeing modest growth, as is spending on small personal luxuries such as cosmetics, sports and recreational goods.”
“We typically see less spending during the colder months, which is why many retailers are shaking off the shackles of winter, embracing Spring and gearing up for a hopeful festive season – with Christmas merchandise already instore.
“This remains one of retail’s most difficult years – with a continued slowdown in discretionary spend, high business costs along with ongoing challenges such as retail crime, supply chain disruptions, and the most significant workplace relations reforms in decades.”
