Retailers suffer as cost-of-living crunch hits shopping habits

Retailers are feeling the crunch of the cost-of-living crisis, with retail sales in Australia continuing to freefall over the past nine months.

Retail sales fell by 0.5 per cent in the June quarter, after falling 0.8 per cent in the March quarter and 0.4 per cent in the last three months of 2022, according to Australian Bureau of Statistics (ABS) data.

The decline marks the first time since 2008 retail sales have fallen three quarters in a row, ABS head of retail statistics Ben Dorber said.

"The widespread fall in sales volumes reflects what retailers have been telling us about consumers focusing on essentials, buying less or switching to cheaper brands," he said.

"Retail sales volumes are down 1.4 per cent compared to the June quarter last year.

"Outside of the pandemic period, this is the first time since 1991 that sales volumes have fallen compared to the previous year."

Food sales volumes went down 0.7 per in the June quarter, falling for the second time in a row, while sales at cafes, restaurants, and takeaway food services dropped for the first time since the September 2021 COVID-19 lockdown, falling 0.1 per cent.

Meanwhile, retail prices rose 0.9 per cent in the June quarter, up from 0.7 per cent in March.

Australia Retail Association (ARA) chief executive Paul Zahra said the decline in consumer spending was piling further pain on retailers amid "a cost-of-doing-business crisis".

"The last time we saw three consecutive quarters of retail sales volume decline was in the Global Financial Crisis – which gives us a concerning insight into the current economic climate," he said.

"Retailers are seeing less demand at a time where wages, rents, insurance, utilities, supply chain and materials are all increasing in cost."

Zahra said the ARA was strongly urging the Reserve Bank of Australia (RBA) to consider the data in future monetary decisions – and show restraint.

The RBA held the cash rate at 4.1 per cent on Tuesday, after increasing it 12 times since May 2022.

Clothing footwear and personal accessory retailing was the only industry to record a rise in retail sales volumes in the June quarter, climbing by 1.1 per cent.

This rise has been attributed to increased promotional activity and discounting with winter clearance sales.

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