DECEMBER RETAIL SALES PUMP, DESPITE HEATWAVE
5 February 2016, Written by Nick Nichols
IT MAY have been tough for Dick Smith Holdings (ASX:DSH), but the broader retail market enjoyed robust trading over December, according to the latest retail turnover figures.
The Australian Bureau of Statistics has revealed that retail turnover was up 4 per cent to $24.8 billion during the peak retail month compared a year earlier.
The growth came on the back of a 4.2 per cent year-on-year gain recorded in November.
However, taking a month-to-month view, retail spending in December was level with November.
The Australian Retailers' Association (ARA) blames heatwave conditions in the Christmas-New Year trading for putting the brakes on the traditionally high-spending post-Christmas period.
Despite this, ARA's executive director Russell Zimmerman says the results were strong on the preferred measure of year-on-year growth.
"Australian retailers will be very pleased with the annual increase in shoppers' spend in December," says Zimmerman.
"December is the biggest month in the retail calendar in terms of sales and this considerable boost finishes off a year of strong increases for the industry.
"We're hopeful the trend of steady growth will continue throughout 2016, with many retailers well positioned to leverage off these improvements with new innovations across online, omni-channel, and bricks and mortar stores.
"I think we'll see 2016 become a year of business evolution for retail, with a host of digitally-based advancements enabling the merging of the online and offline shopping worlds into a more seamless experience."
Online sales growth was the standout performer for the year. According to the NAB Online Retail Sales Index e-commerce sales surged 11.2 per cent in December compared with a year earlier.
This boosted total online retail spending in 2015 to $9.1 billion, or 6 per cent of the total market.
"E-commerce is a vital pillar of all retail business these days, and its double-digit year-on-year growth is unsurprising when you look at how many retailers are now giving their customers the opportunity to shop online at their own convenience," Zimmerman says.
Among the top performing retail sectors in December was household goods, with spending up 5.6 per cent from a year earlier. Department stores also saw a 5 per cent increase in trade, while cafés, restaurants and takeaway foods enjoyed a 3.2 per cent lift.
"Department stores across the board have picked up their act in the past 12 months, and I believe that's reflected in these results," Zimmerman says.
The biggest growth in overall sales came from Victoria, with 5.4 per cent, followed by Tasmania at 5.2 per cent. Spending in NSW was up 4.5 per cent, while Queensland lifted 3.1 per cent and South Australia 3.4 per cent.
"Even Western Australia, which suffered from considerably low sentiment in the lead-up to Christmas as a result of the demise of the mining boom, managed growth of 1.2 per cent," Zimmerman says. "This is a great result for a state that has been struggling to adapt to vast economic change."
Dick Smith Holdings appears to have bucked the rising retail trend, with the company announcing weaker than expected sales over the Christmas period ahead of the board appointing voluntary administrators on February 4.
Author: Nick Nichols