Australian retail sales rose 1.3% in March 2024 (0.8% seasonally adjusted). Given the timing of Easter, judging the results is problematic. However, seasonally adjusted data and our own feedback reinforces the view that sales trends remain weak across March-April. Per capita retail volumes fell 2.3% in the March 2024 quarter. Additional category detail shows weakest underlying trends in electronics, furniture, recreational goods and clothing. We expect very weak trends to persist through to June 2024 with a mild pick up for the back-half of calendar 2024.

What we’re seeing and hearing in retail

• Broad-based softer sales feedback: Our feedback, on March-April combined highlights weaker growth in just about all categories. Electronics is weaker, beauty has slowed a lot and cafes & restaurants are in decline.
• Events matter most: We keep hearing the phrase “value-conscious shopper”. We note that promotional events still work well but sales in between these events are very weak.
• Weather might be a valid reason: It was about 0.7 degrees warmer in March 2024 vs March 2023, not ideal for cooler seasonal merchandise. There was much less rainfall in March YoY.

Sub-sector insights

• Supermarkets: Supermarket sales rose by 4.2% in March and were up 3.0% for the quarter. This is a 20-basis point acceleration from the December 2023 quarter. Independents have slowed, Woolworths is below industry growth and Coles is taking market share.
• Liquor: Liquor sales rebounded 5.4% in March pushing the quarter into growth at 1.6%. Seasonally adjusted growth was 2.5% for March.
• Takeaway food: Takeaway food sales rose by 2.9%, while cafes & restaurants fell 0.7%. Trading down is evident in cafes & restaurants, with supermarkets calling out strength in pre-packaged meals.
• Electronics: Electronics sales fell by 6.6% in March, a continued deceleration, down 4.6% for the quarter. We expect to see a decent improvement at Harvey Norman and slightly softer trends for JB Hi-Fi relative to market. Seasonally adjusted growth was -6.0% in March.
• Hardware and furniture: Hardware sales fell by 1.1% in March 2024 and were flat for the quarter. Bunnings is likely delivering very low sales growth. Furniture sales fell 6.2% in March. Nick Scali noted in its April update that written orders had recovered in March after a very weak February result.
• Recreational goods: Recreational goods sales fell 2.1%, which may reflect weak sales in sporting goods and toys given the Easter timing shift.
• Department stores: Department store sales rose by 3.3% in March 2024. Kmart is winning share, while Big W and Target have lost share.
• Fashion: Clothing sales fell 3.3% in March and footwear and accessories was back to positive by 0.6%. Fashion retailers have called out warmer weather as a drag on sales coming into Autumn. Seasonally adjusted clothing growth was -1.3%.
• Online retail: Online sales rose by 11% in food and fell -1.6% in non-food. Online is growing rapidly for supermarkets but may be cannibalising stores.

Chart: Australian retail sales long term trends

Adjusted three month growth for leap year impact in February 2024. Source:  ABS, MST Marquee