Retailers are banking on a windfall from the Christmas sales period after the Australian Bureau of Statistics today revealed a 0.2 percent drop in sales for the month of October.
This comes after a 0.9 percent sales boost in September, which was undercut by the Reserve Bank’s decision to increase interest rates to 4.35 percent in early November.
National Retail Association Director Rob Godwin said the Christmas sales period will be a make-or-break moment for many retailers given spending in October was underwhelming.
“Consumers were already feeling the weight of high-interest rates and wanted to save their cash for the highly anticipated Black Friday and Cyber Monday bargains,” Mr Godwin said.
“Discretionary spending took a hit with clothing, footwear, and personal accessory retailing experiencing the largest decline of 1.0 percent followed by department stores, which fell by 0.6 percent.
“Food-retailing was the only industry to experience an upswing of 0.5 percent, which is a good sign of healthy non-discretionary spending but also a sign the price of groceries is still on the rise.
“The decline in spending, despite the Halloween discount buzz, indicates shoppers are being more conservative about where they spend their money, and the RBA’s snap decision to raise interest rates in November was ill-advised,” he said.
Victoria experienced the biggest decline in retail sales at 0.8 percent, while Queensland experienced a 0.6 percent sales boost, which could be attributed to the record number of cars sold across the state in October.
“The drop in sales in October motivated retailers across Australia to bring forward their sales nearly three weeks ahead of the Black Friday and Cyber Monday weekend,” he said.
“We hope buzz from the weekend will be enough to carry retailers through the Christmas period, particularly as businesses will struggle to hire new staff.
“We implore the new RBA Governor Michele Bullock to hold interest rates in December to give retailers a fighting chance this Christmas.
“Consumers can expect competitive bargains to ramp up in the 12 days before Christmas as retailers pull out every trick in the book to make up for a flat year of sales.”
The National Retail Association represents more than 60,000 stores across Australia. It has been serving businesses in the retail and fast-food sectors for close to 100 years.