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.

Australian retail sales growth for October 2022 was 12.0% year-on-year. This is still elevated given part of the month was impacted by lockdowns last year. Once again, three-year CAGR growth rates are more relevant. On that basis, recreational goods, liquor and department stores slowed. It is important to note, we will be back to single-digit industry sales growth in November given the very high base line from 2021. A more noticeable slowdown will be evident in the June quarter 2023.

We are entering the silly season for retail. Over recent years promotions have started earlier with a rapid embrace of offshore events like Black Friday. Achieving a good November and December can make or break a retailer’s year. We expect earlier and bigger promotions this November, but it’s not a sign of desperation. These promotions are planned and aimed at stimulating sales. Even so, given huge November events in 2020 and 2021, it will be hard to deliver more than 3% sales growth in our view. With a swing back to stores this year, we expect December to be stronger.

Australian retail sales rose 18.6% year on year in September 2022. The three-year compound annual growth rate for September was 8.8%, an acceleration on 7.7% in August. Interestingly, COVID-19 winning categories, hardware and furniture, have started to slow this month. Online sales have continued to fall, down 18.6% year on year, largely reflecting lockdowns last year. The three-year CAGR remains at 27%. We expect overall retail sales will show weakness in November as we lap large Black Friday sales. Retail sales are likely to be softer in 2023 as higher interest rates take effect and savings rates are lower.