Australian retail sales rose 4.7% in September 2025 year-on-year, an improvement on August 2025 trends. Growth was stronger across all retail categories. While the RBA has paused on further rate cuts, house price growth looks to be accelerating, which is supportive of better retail sales growth. It should be a decent Christmas for most retailers, just watch for the levels of discounting.

What we’re seeing and hearing in retail

• Shifting sales patterns: Sales feedback about August was soft, September stronger and October has been decent too. The big debate will be the strength over November vs December. November has become bigger over the past five years, at the expense of December.
• Promotional fatigue risk: Amazon has declared its Black Friday promotions will start 18 November. If all retailers behave, promotions starting on 18 November will be manageable for margins. Direct marketing promotions are rising and there is a risk discounting ramps before the 18^th.
• House prices the upside risk factor: The Cotality house price index was up 6.1% for October 2025 year-on-year. Monthly growth was 1.1%, suggesting we could see double-digit increases over the next year.

Sub-sector insights

• At-home food and liquor: Total at-home food and liquor grew by 2.5% in September 2025. The September quarter was 2.3% growth. Coles had 4.8% growth and Woolworths was 2.1%. Liquor retail has been weaker than supermarket over the quarter. Tobacco declines of 40%-50% have also impacted sales meaningfully.
• Cafes, restaurant and takeaway food: Total café, restaurant and takeaway food spending was up 6.4% in September and 6.7% for the quarter. GyG’s trading update showed LFL growth of 4.0%. McDonalds commented that it had taken market share in the quarter in Australia. We expect soft sales trends for Domino’s.
• Household goods: Total household goods rose 5.4% in September 2025, a decent month and likely to have been boosted by iPhone 17 launch part way through the month. The hurdle gets higher from October onwards.
• Department stores: Department store sales rose 4.2%, which continues a run of better growth. Kmart indicated sales are trending close to 5% in its recent trading update.
• Clothing & footwear: Clothing & footwear spending grew 3.6% in September and is up 2.5% for the quarter. Universal noted a slowdown in sales lapping strong growth from a year ago.
• Other retailing incl recreational goods: Other retail was up 8%. We have had better feedback on recreational goods. Pharmacy also remains strong.
• Online spending: NAB online domestic sales rose 11.8% in September 2025. Groceries and homewares had single-digit growth. Takeaway food, department stores (incl Amazon) and toys had the strongest growth.
• Non-retail spending: Health expenditure grew 11.6% in September, taking the quarterly total to 7.9%. Transport was also strong, up 6.1% for the month.