Australian consumers remain under pressure with the latest data from the Australian Bureau of Statistics (ABS) confirming subdued retail spending throughout September compared to the same time last year.
A total of $36.45 billion was spent throughout the month of September 2024, up 2.3% on the same month last year.
Australian Retailers Association (ARA) CEO Paul Zahra said that while the modest growth is welcomed, retailers continue to face challenging economic headwinds.
ABS category ‘Other retailing’ – which includes cosmetics, sports and recreational goods – saw the strongest growth in September (up 5.2 % year-on-year) along with the staple category of food (up 3.1%). Cafes, restaurants and takeaway services rose (up 1.4%) year on year. Clothing, footwear and accessories showed marginal growth (up 0.8%), as did Household Goods (up 0.03%) while Department stores recorded a slight decline (down 0.2%).
“We are calling on the Reserve Bank of Australia to provide a cash-rate cut when it meets next week. This decision would give confidence to the retail sector in the lead-up to the all-important peak Christmas season where many discretionary retailers make up to two-thirds of their profits,” Mr Zahra says.
“Interest rates and cost-of-living pressures continue to impact Australians which is resulting in slowed consumer spending in most categories.
“There is some buoyancy in the cosmetics, sports and recreational goods category which show us the ‘lipstick effect’ in action – with Australians continuing to spend on little personal luxuries versus larger purchases.
“Whilst there is great resilience within the industry, we know many retail businesses in the sector are doing it tough, especially small businesses.
“Retailers employ thousands of additional people during the all-important Christmas trading period, providing jobs and supporting the Australian economy,” he said.
Mr Zahra said that retailers have their sights firmly set on the peak season, including Black Friday and Cyber Monday, and the all-important Christmas and holiday period.
“Retailers are gearing up for peak season, with Christmas in full swing, with most consumers having already commenced Christmas shopping to spread out purchases.
“We know this year, more people will be shopping even earlier, planning to complete their gift purchases at the legendary Black Friday and Cyber Monday period – which is why many retailers are eagerly anticipating the back end of next month.
“This remains one of retail’s most challenging 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.”
