The stimulus effect, which delivered four months of growth to the retail sector, is fading, according to the Australian National Retailers Association (ANRA), with the ABS retail trade figures for June revealing retail turnover fell 1.4 per cent.
“The cash handouts were like two shots of adrenalin for the retail sector and the effect has almost worn off,” said ANRA CEO Margy Osmond.
“ANRA was predicting the cash handouts would run out by the middle of the year, so this result is consistent with our expectations. However, I am a little surprised at the extent of the drop, which is disappointing.
“Without these cash handouts, the situation would be worse,” warned Osmond.
”We estimate that $4.5 billion, or a fifth of the two cash handouts, has been injected into the retail sector since December last year.”
“We are now not expecting to see a broad pick up in retail turnover until Christmas, provided unemployment doesn’t accelerate.
“The Federal Government needs to continue to work hard to protect jobs. Rising unemployment is the biggest threat to consumer confidence,” said Osmond.
The only State that bucked the downward trend in June was NSW which grew marginally by 0.1 per cent. The rest of the country suffered falls. Victoria was down 1.3 per cent, Queensland down 3.5 per cent, South Australia down 1.5 per cent. Western Australia is down 1.8 per cent, Tasmania down 2.1 per cent, a 2.8 per cent drop in the Northern Territory, and the ACT is down 1.6 per cent.
During June, Department stores suffered the biggest fall, dropping 8.8 per cent. Even food fell, down 0.7 per cent. Clothing and soft good retailing is down 7.4 per cent. Only household goods retailing grew – up 2.9 per cent.
The National Retail Association (NRA) executive director Gary Black said that retail sales data for June 2009 reflects an expected softening of sales performance following the very strong performance shown in the April and May 2009 data, the ending of the stimulus payments and rising unemployment.
“Notwithstanding recent improvements in consumer confidence and broad optimism within the retail sector about future prospects, for many retailers, particularly independent clothing and fashion retailers, conditions remain very challenging and significant levels of concern prevail around future levels of profitability and employment,” he said.
These concerns are exacerbated by rising rents and significant labour cost increases resulting from the award modernisation process which will jeopardise jobs and employment opportunities for young people, 50 per cent of whom rely on the retail sector for an income.