Consumer sentiment continued its decline in April, decreasing by 0.9%, as consumers remain concerned about the cost of living, including anticipated increases in the official cash and mortgage rates (now a reality).
The most recent ABS data shows a 1.8% increase in traditional retail sales in February 2022, a month when consumer sentiment was (slightly) still in positive territory at 100.8. Despite a 3.5% drop in online sales in February 2022 (compared to January), the sales data showed online sales were 13.4% higher in February 2022 than February 2021. Online sales growth may moderate (or decline on a seasonally adjusted basis) as movement restrictions are lifted, making it easier to physically engage with retailers.
Source: Westpac – Melbourne Institute Consumer Sentiment Index
Westpac’s consumer sentiment index posted a modest 0.9% decline in April 2022, representing a fifth consecutive monthly decline. The index is at its lowest level since September 2020 and has deteriorated by 19.4% since the high point in April 2021. The ongoing war in Ukraine, weather events in the Eastern states, concerns about the cost of living and interest rate rises continue to weigh on consumers’ minds. The complementary survey measures also suggested further evidence of inflation influencing consumers as the ‘time to buy a major household item’ sub index fell by 5.3% to 98.2. Revenue headwinds coupled with supply chain difficulties (cost and availability) and wage pressure means retailers should create an integrated plan with suppliers, financiers, and customers to build resilience within their business and processes, while also allocating resources towards e-commerce to ensure smooth transactions and competitive response times for consumers.
Source: Australian Bureau of Statistics
ABS retail sales in February 2022 improved for the second consecutive month (+1.8% vs January 2022) and were $2.75 billion higher compared to February 2021 (+9.1% vs February 2021, +19.0% vs February 2020). Sales data varied amongst states, with improvement primarily driven by New South Wales (+3.9%), while material decreases were experienced in Northern Territory (3.8%) which has suffered from floods and Western Australia (2.9%) which has experienced a surge in COVID cases.
Online retail sales
Source: NAB Online Retail Sales Index
Online retail sales declined 3.5% in February 2022 (seasonally adjusted), reversing some of the 7.2% improvement in January 2022. Despite the decline, online sales in February 2022 remain 13.4% up on February 2021. Online sales for the twelve months to February 2022 represented 14.7% of total retail sales during that period ($54.7 billion) and were 17.4% higher than the 12 months to February 2021.