Fashion and department stores have made a major comeback in January 2023, following a sales dive in the previous month, according to the Australian Bureau of Statistics (ABS).
Department stores saw the largest spike than any other retail sector of 8.8%, followed by clothing, footwear and personal accessory retailing at 6.5%.
Both sectors also saw growth year-on-year, with department stores up 16.6% and clothing, footwear and accessories up 17.5%.
Total Australian retail turnover rose 1.9% in January on the prior month, and 7.5% on January 2022, with total spending for the month hitting $35 million.
ABS head of retail statistics Ben Dorber said the rebound in retail turnover followed a 4% drop in December and a 1.7% rise in November.
“Looking through this volatility shows that turnover is at a similar level to September 2022, and on average, growth has been flat over the past few months,” Dorber said.
“November, December and January are the most seasonal months of the year, with retail activity heavily affected by the Christmas period and January holidays. This has been heightened by an increase in the popularity of Black Friday sales and growing cost of living pressures combining to drive a change in usual consumer spending patterns.”
Australian Retailers Association (ARA) CEO Paul Zahra commented on the results, saying whilst they remain impressive, the cost of doing business and gross margins for many retailers remains a serious concern.
“Today’s sales data is a strong result, particularly for apparel traders and department stores who have worked hard to clear their summer inventory,” he said.
“There’s no doubt that an impressive Boxing Day trade certainly bolstered these sales, with the shoppathon a fixture on the January calendar.
“The sales recorded by restaurants and cafes are particularly strong – and it’s clear the appetite for dining out has been boosted after the challenges of the pandemic.”
National Retail Association CEO Greg Griffith added to Zahra’s comments on retailer concerns, saying the 1.9% increase is attributable to the higher costs shoppers are seeing in stores.
“January typically is one of the most seasonal months for retailers,” Griffith said. “While spending would have been slightly higher in January, we think it’s more likely that we’re seeing inflated costs hidden in the data, rather than volumes.”
Griffith suggested that retail growth has remained steady over the past year, adding that retailers and shoppers are balancing their needs with economic uncertainty.
“The retail sector has bunkered down for slow spending from this month onwards until inflation is tipped to decline later this year,” he said.
“With the string of interest rate rises that will continue in the [coming] months, we will likely see retailers pass on their increased costs on to consumers.”
Griffith emphasised that retailers are dealing with a myriad of issues unique to the sector.
“Adding further to the strain, we are still faced with a labour shortage and have seen a drastic increase in retail crime across the country,” Griffith said. “These issues all contribute to the squeeze on retail spend and growth.”