Retail – Year in Review 2022
26 May 2023
COVID-related “protective forces”, coupled with high household savings levels, pent-up “lockdown demand” and solid labour market conditions provided strong momentum for retail sales in 2022, despite a backdrop of rapidly deteriorating consumer sentiment from around March. Retail sales grew by 11.4% to $411.5 billion in 2022, compared to 5.5% in 2021. Considering annual CPI growth of 7.8% to December 2022, underlying volumes grew more slowly, than the headline 11.4% suggests.
Online retail sales growth was only 1.8% in 2022, cycling extraordinary pandemic-driven growth experienced through online channels in 2020 (37.6%) and 2021 (19.2%). The lower growth reflected a rebalance back to in-store purchases during 2022.
Global geopolitical factors, rising interest rates, inflation, and escalating cost of living pressures dominated the media landscape and weighed on the consumer psyche, resulting in persistent declines in consumer sentiment levels throughout 2022, finishing the year at a very pessimistic index of 80.3, 23% below December 2021.
As the impact of the COVID-related “tailwinds” lessens and more macroeconomic “headwinds” impact consumer sentiment and spending. We anticipate 2023 will be a more challenging environment for retailers.