Australian retail sales rose 4.1% in November 2024. In non-food retail, sales were up 4.0%, while the CAGR growth over five years was 7.3%. November benefited from a bigger Black Friday event but also from warmer, drier weather. Supermarkets, liquor, fashion and cafes/restaurants all had much stronger growth. The sales trends have improved in recent months, which may be a little stronger than true trends because of favourable weather and the heavier discounts enticing shoppers. We expect some softness in the March 2025 quarter.

The outlook for retailers this festive season is constructive. Perhaps it is best characterised as a sign of the times where consumers are acting cautiously but do have money to spend. Therefore discounts are working. Black Friday event sales were likely up 4%-7% for many retailers based on our feedback. We expect the strongest growth was online. Amazon took share. Home appliances, fashion and beauty have done best. However, there are more discounts.

Australian retail sales rose 3.8% year-on-year in October 2024. It was a strong month for non-food retail up 5.1%, which is above long-term trends. It is uncommon for non-food to outperform, but the combination of good household income growth and a softer September has brought out shoppers. Pharmacy, cosmetics, recreational goods and online were the strongest growing categories. Our feedback on Black Friday sales suggests November will show solid growth too. We may see some weakness in December as promotional fatigue sets in.

Accent Group will provide a trading update at its November AGM. Like-for-like sales growth for the first seven weeks of FY25e was 3.5%. We expect trends to have slowed slightly and forecast 1H25e like-for-like sales of 2.8%. We have included the recently announced distribution agreements to our forecasts.  We also consider peer commentary on gross margin and competitive behaviour.

The festive season is the key profit driver for almost all Australian retailers. Its shape has shifted meaningfully over the past decade as Australian shoppers have embraced Black Friday promotions. We expect an even bigger November sales period in 2024 as more retailers and consumers position for Black Friday deals. While November gets bigger, it has largely been at the expense of December sales. The timing of promotional events is also shifting a little and we may see promotions earlier in November this year. The primary risk for retailers is longer, deeper discounting impacting gross profit margins. 

We have updated our retail sales forecasts, which are modestly higher in FY25e and slightly lower in FY26e. We forecast FY25e retail sales growth of 3.2% (prev 2.9%) and the largest driver of our revisions is stronger non-food online sales growth. A retail recovery is underway, because this year has unquestionably strong household income growth, which sets a solid base for retail spending. However, households have a low savings rate, which detracts from the upswing. We expect a more notable pick up in household goods and online with softer sales in dining out for FY25e.

Australian retail sales for November rose 2.1%. Black Friday promotions drove improvements particularly in electronics, department stores and furniture. Online food and non-food were both positive, with online food strength growing double-digits. While there are concerns about a pull forward of sales into November, our feedback suggests December sales held up reasonably well.

Australian retail sales for October 2023 rose 1.3%. Category variability continued with dining out resilient and weakness in furniture, electronics and recreational goods. Supermarkets slowed as fresh deflation dented sales. The expectation of Black Friday sales in November likely gave consumers a pause during October in some discretionary categories. Our feedback on November sales and Black Friday have been stronger.

We are approaching the most important time of year for retailers where a successful festive season can make or break the year. For 2023, retailers are planning bigger and earlier events in November. Black Friday sales are likely to pull forward spending yet again. We expect the most noticeable boost to sales in electronics and recreational goods where supply has improved. While there is upside risk to consensus sales for 1H24e, the challenge will be profit margins. We are more cautious on margins and see a downside skew to risks given earlier discounting by retailers.

Australian retail sales growth of 7.7% for November 2022 continues the strong run during the calendar year. The growth is impressive given incredibly strong growth in both 2020 and 2021 for November as the country emerged from lockdowns. There was very high growth in café & restaurants, a sign of consumer confidence in our view. Sales rebounded strongly in supermarket and liquor too. Generally, high price inflation is propping up growth across the industry and will continue to do so into the first-half of calendar 2023.