Australian retail sales rose 4.1% in January 2025 with decent signs of growth across most categories. Liquor is still lagging, while hardware and electronics were softer than recent months. Pharmacy and recreational goods were the standout segments. We expect retail category and company divergence to rise over the next six months. Overall sales trends are likely to bounce around the 3%-4% mark, which is satisfactory growth, but still a challenge relative to cost growth.

What we’re seeing and hearing in retail

• Jan vs Feb feedback: Most feedback we have had on February has been stronger than January, particularly in non-food areas. Harvey Norman called out a stronger February.
• Housing-led recovery: There was a strong rebound in housing churn in the December 2024 quarter. Electronics, furniture and hardware have all had a good three months. Perhaps the response to rate cuts started early?
• Kiwis starting to spend again: ‘Green shoots’ in New Zealand retail spending has been called out following 175bp of rate cuts since August 2024. Warehouse Group growth turned positive in January, while JB Hi-Fi was up 8% and Woolworths NZ up 4% in first seven weeks of 2025.

Sub-sector insights

• Supermarkets: Supermarket industry sales rose 3.1% in January 2025, a slight acceleration. For the first seven weeks of 2025, Coles was up 3.4% and Woolworths was 3.3% higher.
• Liquor: Liquor industry sales were up 0.2% in January, a recovery from a 1.7% decline in December. Coles Liquor was up 3.8% in its first seven weeks compared with a -0.8% decline for Endeavour Retail.
• Takeaway food and restaurant: Takeaway food sales grew at 3.7% and cafes & restaurants were up 5.0%, winning share from off-premise liquor.
• Pharmacy & cosmetics: Pharmacy continued its impressive run with 9.6% growth in January 2025. The five-year CAGR is 9.0%, ahead of long-term trends. Lower CPI on PBS medicines from 1 Jan has also not dented sales.
• Electronics: Electronics sales were up 2.1%, a marked slowdown on recent trends. JB Hi-Fi managed comp sales up 7.1% and Harvey Norman was 2.1% higher. Timing of promotions is creating monthly volatility.
• Hardware and furniture: Hardware sales rose 1.5% and furniture was up 3.6%. Both represent a slowdown on recent trends and may simply reflect some pull forward into November and December.
• Recreational goods: Recreational goods sales rose 7.3% for January 2025, which is similar to Rebel which had 7% LFL growth, BCF was up 5% and so was Macpac in its first seven weeks.
• Department stores: Department stores had growth of 3.2%. Kmart stated sales were better than 2%, while Big W was up 1% in its first seven weeks.
• Fashion: Clothing was up 5.8% and footwear increased 4.3% in January, which is an acceleration and may reflect warmer weather as well as lingering promotions across the sector.
• Online retail: Online sales continues its recovery. Overall growth was 12.5% with similar growth across food and non-food categories.

Australian retail sales long-term trends

Source: ABS, MST Marquee