Restrictions hamper Australians’ purchases of everything but food

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Australian retailing has been hit by lockdowns and other restrictions, new figures show, but shoppers continue to spend heavily on food.

According to data from the Australian Bureau of Statistics released on Wednesday, total retail trade turnover fell 1.8% in June, seasonally adjusted, the director of quarterly economy-wide surveys said. Ben James, unsurprisingly attributing the drop to coronavirus restrictions in several states.

“Victoria saw restrictions from the start of the month, which were gradually eased from June 11,” he noted.

“NSW, particularly Greater Sydney, saw stay-at-home orders issued towards the end of the month.

“Other states and territories have seen their trade disrupted due to mini-locks, as well as reduced mobility between states with tighter border restrictions.”

Given the worsening situation of Covid-19 in the country this month, July’s retail figures are expected to show a larger drop.

Victoria dominated the state’s falls in June, with the impact of its fourth lockdown more pronounced last month than in May, when revenue fell 3.5% and 0.9% respectively.

Turnover was 2% lower in NSW last month while Queensland also fell, 1.5%, due to stay-at-home restrictions and reduced interstate mobility.

Only food retailing increased 1.5 percent in June.

Unsurprisingly, the largest declines in turnover were in cafes, restaurants and take-out food services, as well as clothing, footwear and personal accessories retailing.

CommSec senior economist Ryan Felsman said it was the biggest monthly drop in total retail sales in six months.

“The country’s ‘V’ shaped economic recovery could quickly become ‘W’ shaped if the persistent outbreaks of Covid-19 are not brought under control,” Mr Felsman said.

“Commonwealth Bank economists are already expecting GDP to contract 0.7% in the September quarter, alongside a likely rise in the unemployment rate in July.

“With closures spreading to Sydney and Victoria alongside mobility restrictions in South Australia, it will be interesting to observe whether companies view the latest outbreaks as transient – preferring to retain workers by cutting hours rather than jobs. “

Australian Retailers Association chief executive Paul Zahra said lockdowns appeared to be expected for the remainder of the year due to concerns about the Delta variant.

“We have already seen 68 days of state-imposed shutdowns in 2021 and there is no doubt that number will continue to increase,” Zahra said.

“Small businesses in particular are in crisis and are hit hard by blockages. While existing supports are welcome, they are not enough to stem the losses.

“We need to see an urgent return of effective support programs like JobKeeper and the Rental Code of Conduct that have been so beneficial in keeping businesses alive during the first phase of the pandemic. “

Mr Felsman advised investors in ASX-listed retailers to expect the impact of restrictions on the July and August trade updates, noting that electronics giant JB Hi-Fi warned on Tuesday that its sales had suffered in recent weeks.

“Consumer demand may be weaker given the reduction in government income support and the uncertainty about the job market,” Felsman said.

“And construction stoppages could affect hardware store sales.”

Meanwhile, the easing of the pandemic-induced online shopping boom continues to be felt for online retailer Kogan, which took stock of its frantic efforts to deal with the overzealous stockpiling it has undertaken. at the end of last year, believing that demand would likely continue second half “and potentially grow further”.

“The company has invested in inventory and operational capacity to be able to meet this growth,” Kogan said.

“As it is now clear, the company’s expectations were not correct and, as a result, the company bought too many shares.”

Kogan was forced to cut back sharply while paying high warehousing costs.

The retailer says, however, that efforts to reduce inventory have come a very long way and the right levels are being approached.

Kogan’s unaudited accounts show a more than 56% increase in full-year revenue.


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