The fashion category leads overall retail sales in March

Sales of clothing, shoes and accessories fell by 4.3 percent in March 2024 compared to the previous month, and by 0.4 percent compared to March 2023.

This is according to new data from the Australian Bureau of Statistics (ABS), which shows fashion is the top retail category to record a decline in sales this month, and the second largest percentage decline year-on-year.

Department stores recorded the second biggest decline of 1.6 percent month-on-month, followed by household goods at 1.4 percent.

According to Ben Dorber, head of retail statistics at ABS, the decline in both the fashion and department store categories comes after big increases in the previous month, which were then driven by a sales increase from Taylor Swift.

On an annual basis, department store sales fell 0.3 percent, while household goods sales fell 3.1 percent.

Meanwhile, other retail businesses – including cosmetics, sports and leisure goods – saw the strongest year-on-year growth in March, up 2.4 percent, while monthly sales fell just 0.3 percent.

The only category to record an increase in monthly retail sales was grocery retail, with an increase of 0.9 percent.

Overall, Australian retail sales fell 0.4 per cent to $35.6 billion in March 2024, following a 0.2 per cent increase in February and a larger 1 per cent increase in January.

“Consumers cut back on retail spending in March as cost-of-living pressures remained high,” Dorber said.

“Underlying retail sales have been flat over the past six months and were only 0.8 percent higher than in March 2023. Outside of the pandemic period and the introduction of the GST, this is the weakest growth on record when comparing sales to the same period in 2023 .the previous year.”

According to the Australian Retailers Association (ARA), retail sales remained subdued in March 2024, up modestly by just 0.8 per cent compared to the same time last year.

ARA CEO Paul Zahra said this is despite Easter celebrations, holiday spending and the additional spending of one million Australians over the Easter holidays compared to the previous year.

“In previous years Easter fell in April – this year we celebrated Easter at the end of March, which helped prevent the overall trade from slumping,” said Zahra.

“Australians are still cutting back on spending as the lag effect of interest rate rises continues. While food spending remains steady, there has been a shift towards more affordable and value-oriented products in recent months.”

Zahra added that discretionary categories are being hit the hardest, with declines particularly noted in homewares, fashion and department stores. And this despite the fact that the mid-season sales start earlier due to Easter.

“Continued pressure on the cost of living and the impact on interest rates makes it a challenging period for those in the discretionary retail sector,” Zahra said.

“While we are hopeful of a rate cut in the near future, for retailers we expect the pressure from a slowdown in discretionary spending combined with pressure on the cost of doing business to persist for most of this year.

“More than six million Australians are paying mortgages, and this remains the biggest financial stressor for these households.

“As long as interest rates remain high, discretionary spending will suffer.”

Meanwhile, the National Retail Association is calling on the federal government to tackle the trading costs crisis, amid the latest ABS release.

National Retail Deputy CEO Lindsay Carroll said any momentum gained by Taylor Swift’s March concerts was undone.

“Retailers selling exclusive items are most at risk of exiting the market and use any increase in sales as a life raft into the next month,” said Carroll.

“Businesses are struggling with unprecedented rent increases, skyrocketing energy prices and insurance, and the government’s May Budget is fast becoming a beacon of hope for many shop owners.

“High interest rates and low consumer confidence have pushed retailers into a trading cost crisis, putting Australia’s second largest employer at risk.

“We are calling on the federal government to put downward pressure on energy and insurance costs so that retailers suffering from tight consumer spending can keep more of what they earn.”

Ms Carroll said states that enjoyed a rapid boost to trade last month saw a relatively worse decline in March, with Victoria and New South Wales falling 0.8 per cent and 1.1 per cent respectively. While non-tour states, including Queensland (0.4 percent), made a slight comeback.

“77 percent of Australian businesses expect their overhead costs to deteriorate over the year, so any sugar hit on retail sales is likely to be lost soon after it is earned.

“The May Budget gives the Federal Government an opportunity to tackle skyrocketing energy and insurance premiums and take the undue pressure off Australian businesses, the lifeblood of our economy.”