Retail hit by more weak growth, 2012 outlook ‘shaky’
Retailers have suffered another set back with sales figures released today showing below expected growth overall and more declines for department stores and clothing and footwear retailers.
The Australian Bureau of Statistics’ (ABS) February retail trade figures show monthly growth of 0.2% and year-on-year growth of 2%. However, department stores experienced a year-on-year decrease of 2.8% while the clothing and retail sector took a 2% dive.
Even household goods declined (by 0.5%) putting retailers off to a shaky start in 2012 as households juggle back to school costs with higher interest rates and Christmas credit card debt.
Executive director of the Australian Retailers Association, Russell Zimmerman, says that while February is traditionally the toughest month of the year, the results were below expected growth levels.
“At the moment the outlook for 2012 is shaky and if there is no relief retailers will be looking to cut staff and reduce hours in order to cope,” Zimmerman says.
“Declines across these key discretionary areas [department stores and clothing and footwear retail] clearly indicate retailers are picking up the pieces of consumers who are under stress as a result of many factors, not least consumers who were spared no relief from RBA’s rate holds in early February due to decisions by the big banks to raise interest rates anyway,” Zimmerman says.
The results could have been worse if not for food retailing and restaurants and cafes which continued to buoy sales figures, with year-on-year increases of 2.5% and 4.5% respectively.
Zimmerman says the figures show the trend towards eating out continues to gather steam, with eating out seen as an “affordable indulgence”.
Queensland made the largest contribution to the sales growth this month, recording a 1.5% boost, followed by Western Australia at 1.0% and South Australia (0.7%). Turnover fell in New South Wales (-0.6%), Victoria (-0.4%), the Australian Capital Territory (-0.7%) and Tasmania (-0.1%).
Looking ahead, Zimmerman expects spending to return somewhat and the outlook for 2012 to become clearer next month. “Consumers’ Christmas ‘hangover’ should have mellowed and we will start to see a clearer indication of how the retail sector will fare for the rest of the year.”
The RBA decided against making a rate cut this afternoon, leaving the cash rate at 4.25% for the third straight month.