Retail sales surge 9.4 per cent – but good times ‘could be short lived’

Retail customer experience

Australian retail sales surged 9.4 per cent in March compared with the same month last year as the impact of Omicron on consumer shopping behaviour wore off. Month on month, sales were up 1.6 per cent.

March saw the highest growth rate since April last year when sales surged 24 per cent against April 2020 when lockdowns devastated the retail trade. And the volume of retail sales reached a record $33.6 billion in stores and online in March, eclipsing the previous record of $33.3 billion set in November 2021.

Ben James, director of quarterly economy wide statistics at the ABS, said rising prices, combined with the continued easing of restrictions across the country had fuelled turnover in all three months of the March quarter.

“Consumer spending rose across both discretionary and non-discretionary industries,” James said. “Following flooding in late February and early March along the east coast, impacted businesses regained lost turnover from forced closures as consumers restocked pantries.”

Retail sales rose in every state except for SA, which eased by 0.7 per cent month on month. The greatest increase was in Queensland, up 3.4 per cent, followed by WA and NT (1.9 per cent), NSW (1.8 per cent) and the ACT (1.1 per cent).

By category, department stores led the growth, up 4.1 per cent, followed by household goods, up 3.4 per cent, other retailing (2 per cent), and cafes, restaurants and takeaway food services (2 per cent). Apparel sales grew by just 0.5 per cent.

NRA CEO Dominique Lamb said the increase in retail turnover was a sign of continued recovery for the industry, but warned “the good times could be short lived” after taking into account yesterday’s interest-rate rise and looming increases in superannuation and award wages from 1 July.

“The looming increases in interest rates, superannuation and award wages represent a very unwelcome triple whammy for business owners,” Lamb said. “We would be very concerned if the Reserve Bank Board were to use these figures as justification for a further rates hike in June. We think they need to wait and see how yesterday’s increase affects the May retail sales results before they move again.”

Australian Retailers Association CEO Paul Zahra said that while March’s figures represented a ‘phenomenal result’, spending challenges loom during the months ahead as cost-of-living pressures begin to impact family budgets.

“We’re in an uncertain economic environment, with cost-of-living pressures starting to bite and interest rates rising for the first time in over a decade,” Zahra said. “Whilst the top-line performance of retail trade is strong, consumer confidence has fallen significantly this week and we could see more subdued levels of consumer spending in the months ahead as people start to tighten their household budgets.”

This story first appeared on our sister publication Inside Retail