May 06 2020
The outbreak of COVID-19 has had a substantial effect on Australia’s retail sector. Recently released statistics from the ABS show Australian retail turnover rose by 8.5% in March, following a rise of 0.6% in February. The substantial growth in retail spending in March was largely driven by unprecedented demand for food retailing, household goods, and other retailing, including pharmaceutical and cosmetic products. Food retailing turnover rose by 24.1% in March, while other retailing and household goods retailing grew by 16.6% and 9.1% respectively. This unprecedented growth was driven by the panic buying witnessed across the country, due to consumer fears regarding the future supply of essential items.
Despite strong growth in some segments, many retailers reported a deterioration in demand conditions in March. The spread of COVID-19 has led to the government implementing social distancing measures and restrictions on non-essential services, which has driven the largest decline in demand for cafes, restaurants and takeaway food services, since the data series began. Additionally, retailers offering non-essential products recorded a decline in demand over March, with revenue for clothing, footwear and personal accessory retailers and department stores, declining by 22.6% and 8.9% respectively. The decline in consumer sentiment and rise in unemployment, stemming from the COVID-19 outbreak, are the primary drivers in the decline in turnover for non-essential retailers. Consumer concerns regarding their household finances have discouraged spending on non-essential items, while social distancing measures and non-essential services restrictions have prevented many Australians from visiting retailers.
The ongoing COVID-19 pandemic has encouraged more Australians to shop online. Online spending accounted for 7.1% of total retail spending in the month of March, up from 5.7% in March 2019 Social distancing measures and non-essential services restrictions have encouraged a number of Australia’s retailers to close their physical stores in late March, while continuing to offer ecommerce services.