What's News in Retail

Consumer confidence

Consumer confidence

The Westpac-Melbourne Institute Consumer Confidence Index increased by 2.3% in February 2017.

While the Westpac-Melbourne Institute Consumer Confidence Index remains at pessimistic levels at 99.6, the 2.3% improvement in February is a welcome sign for retailers (following depressed levels over the last two months).

The improved sentiment was across the board with all component indices reporting gains in February.

‘Family finances vs a year ago’ reported the largest monthly gain (an increase of 4%), however it remains in deep pessimistic territory at 82.9.

Despite the gains in February, only two component indices are at optimistic levels, with ‘time to buy a major household item’ propping up the entire index, as it has done for the past few years.


Retail sales

Seasonally adjusted growth in retail sales

Retail sales by geography and category

Retail sales fell by 0.1% in December 2016 (seasonally adjusted), as reported by the ABS.

While the 0.1% contraction in December is only the second monthly decrease in retail sales in the last 18 months, it is representative of a continued deterioration in retail sales performance since September 2016.

We note that the Consumer Confidence Index fell into pessimistic territory for the first time in five months in December 2016.

Over the last 12 months cumulative growth in retail sales totals 3.0% with 1.6% of the growth occurring during FY17.

Geographic results were mixed. South Australia, Northern Territory and Western Australia performed well reporting growth of 1.2%, 1.1% and 0.6% respectively. New South Wales and Victoria gave up most of their gains from the prior month and contributed heavily to the overall decline in retail sales. The Australian Capital Territory also saw a material decline.

‘Clothing, footwear and personal accessory’ was the standout for a second consecutive month, recording a 1.4% improvement (+3.7% in the past two months). ‘Food retailing’ (0.5%), ‘department stores’ (0.3%) and ‘cafes, restaurants and take away food services’ (0.2%) all reported modest improvements. ‘Household goods’ was the worst performing sector over the Christmas period, recording a 2.3% contraction (largest in 5 years), consistent with a material decline in the ‘time to buy a major household item’ consumer confidence measure in December.


Online retail sales

Retail sales by geography and category

Online sales grew by 1.0% in December 2016 (seasonally adjusted) as reported by NAB.

The NAB Online Retail Sales Index grew by 1.0% in December, which represents a slowing in both the rate of growth (when compared to November 2016) and reduced volatility in the index (when compared to the first half of CY2016).

NAB estimates in the 12 months to December 2016, Australians spent approximately $21.7 billion online which is the equivalent of 7.1% of spending at comparable traditional retailers.

NAB reports that the key categories that contributed to the December result were ‘takeaway food’, ‘daily deals’ and ‘toys’, which improved 3.6%, 2.7% and 2.7% respectively. NAB also reported growth in the ‘homewares and appliances’ (2.3%) and ‘media’ (2.0%) categories.

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Authors

Jason Ireland
Jason Ireland
Partner – Sydney

T +61 2 9338 2694
E jireland
Keith Crawford
Keith Crawford
Partner – Melbourne

T +61 3 9038 3126
E kcrawford
Damien Pasfield
Damien Pasfield
Director – Sydney

T +61 2 9338 2691
E dpasfield