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Retail sector growing but long road remains to full recovery

Adrian Flores
Adrian Flores
23 July 2020 1 minute readShare
Retail sector growing

Retail trade figures for June reveal promising signs of a recovery, but much of the sector remains reliant on government stimulus and these figures don’t account for the recent Victorian lockdown.

Strong retail sales in the Australian Bureau of Statistics preliminary retail trade figures for June are a promising sign for retail, but remain bolstered by stimulus spending, the Australian Retailers Association (ARA) said today.

Preliminary data from the ABS showed a 2.4 per cent lift in estimated retail turnover from May to June 2020, with turnover increasing by 8.2 per cent in June 2020 compared with the same period last year.

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However, according to the ARA, discretionary retailers — particularly those selling clothing, footwear and personal accessories — continue to face difficult conditions despite the promising signs of June, with sales still remaining down year-on-year despite sales discounts and strong availability of stock following previous store closures.

ARA chief executive Paul Zahra said June numbers capture a clear month of retail activity following the national lockdowns but prior to the new Victorian restrictions setting in.

 

“These figures tell us government support measures are working as an effective economic stimulus, and with JobKeeper and JobSeeker extended into next year, that’s heartening news,” Mr Zahra said.

“However, not everyone is experiencing growth. We currently have a two-speed retail economy, with retailers in Victoria and those in CBD and tourist-dependent locations the hardest hit.

“The impact of Victoria’s lockdowns is expected to be severe through July, dampening consumer sentiment and putting the brakes on a national recovery.”

Mr Zahra said the extension of JobKeeper and JobSeeker will be a crucial support measure in the coming months, providing much-needed certainty for retailers as they plan for the critical pre-Christmas trading period.

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“The October to December quarter will be make or break for many retailers, as the sector still faces significant headwinds,” he said.

“The federal government support announced will alleviate some pressure for those hardest hit and help sustain consumer spending, which will protect the jobs of many Australians.

“Ultimately, the outlook for retail is positive, but we won’t see that for some time. The road to recovery remains challenging.”

Retail sector growing but long road remains to full recovery
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Adrian Flores
Adrian Flores

Adrian Flores is the deputy editor of MyBusiness. Before that, he was the deputy editor for SMSF Adviser as well as features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at [email protected].

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