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Expect softened sales as JobKeeper ends, warns ARA

The Australian Bureau of Statistics (ABS) has confirmed retail sales increased 9.1% through the year to February, however sales are expected to soften in the coming months as JobKeeper and the JobSeeker supplement conclude, and some retailers begin to cycle panic-buying from last year.
There was strong year-on-year growth across the major categories of retail with household goods (up $855 million or 18%) clothing, footwear and personal accessories (up $284 million or 14%) department stores (up $88 million or 6%) and food retailing (up $779 million or 7%). However, cafés, restaurants and takeaway food services were down $88 million or 2%.
Australian Retailers Association CEO Paul Zahra said while JobKeeper has been a saviour, keeping businesses afloat through the worst of the pandemic, there are two cohorts of retail that are most at risk now that the wage subsidy is gone.

“The outlook for retail trade remains robust, however the economic recovery is uneven and not everyone is benefiting from the same levels of spending. Travel retailers and SMBs in our CBDs continue to suffer and will be hardest hit by the end of JobKeeper coupled with the end of leasing protections,” Zahra said.

Cafés, restaurants and takeaway food services were down $88 million or 2%
“While it is encouraging to see the steady return of office workers to CBDs, occupation rates remain significantly lower than normal. Coupled with the absence of international visitors and lower domestic visitors within CBDs, the outlook remains devastating for these retailers – as it does for retailers reliant on global travel, with expectations around the return of international travel remaining in the distant future. Unfortunately, this group of retailers are a forgotten cohort, falling outside the existing government support schemes.
“The COVID threat remains alive as we’ve seen with the recent outbreak in Brisbane, which has spread to Northern NSW. Lockdowns and restrictions come at a tremendous cost to retail, and they are counting the cost of lost turnover during one of the busiest times of year, with many holiday-makers having to cancel their plans.
“Despite the setbacks, most retailers have been resilient through the COVID pandemic and we are hopeful of a solid second half with vaccinations continuing to rollout creating more certainty,” said Zahra.

“The retail figures for February are encouraging, and while we don’t expect a ‘fiscal cliff’ with the removal of JobKeeper, we do expect sales to soften in the coming months and some businesses are unfortunately in the process of letting people go, which will impact broader consumer spending, as will the reduced JobSeeker payments. Some retailers could see year-on-year sales soften as a result of the increased levels of panic buying we saw around this time in 2020.

“One of the bright spots through the pandemic has been the incredible growth of online trade, with sales increasing 52.5% through the year to February according to the ABS. New figures were also released this week by Australia Post showing 9 million – or 82% of Australian households shopped online in 2020.
“We’ve seen a powerful shift in consumer trends due to COVID and retailers have done an incredible job to boost their online offerings to better meet the needs of consumers and help keep sales moving through lockdowns and restrictions,” Zahra concluded.

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