Divergence in spending across the retail landscape means not all categories are on an equal footing, despite a strong lift in total spending volumes during June and July 2020.
As a result, there has been a wide range of growth across both categories and states, with sectors like recreational goods and liquor performing exceptionally well while spending at cafes, restaurants and catering services has plummeted.
The findings, from Deloitte's quarterly Retail Forecasts report for the third quarter, demonstrate how overall retail spending is faring better than general consumer spending.
According to Deloitte, retail volumes fell just 3.4 per cent over the June quarter, compared to a 12.1 per cent collapse in household spending.
Looking ahead, the report forecasts this positive momentum will continue into the September quarter, with retail volumes expected to bounce back by 5.4 per cent.
Even on a year-on-year basis retail spending volume are up 7.4 per cent in June compared to the previous year.
However, Deloitte Access Economics partner and the author of the Retail Forecasts report David Rumbens says while the figures look healthy on a first glance, the real story is told when broken down into categories.
"There is an enormous gulf in retail performance by sector. Restrictions have sent cafes, restaurants and catering services into a tailspin, with spending remaining over 20 per cent lower than pre-COVID levels in the month of July," says Rumbens.
"Meanwhile, with more people at home more of the time, spending on recreational goods, alcohol, electrical and electronic goods, and hardware, building and garden supplies have surged, with all posting more than 30 per cent gains in the month of July compared to pre-COVID levels.
Change in nominal retail spending compared to pre-COVID levels (via Deloitte)
"And it's not just categories experiencing a divergence in spend. Victoria's second wave COVID outbreak and Stage 4 restrictions have sent the state back into a spending slump. Meanwhile retailers in Queensland and Western Australia continue to benefit from the easing of restrictions."
According to Rumbens the COVID-induced employment crisis has hurt take home incomes and eroded consumer willingness to spend.
This is despite fiscal stimulus resulting in more cash washing through the economy, adding 2.2 per cent on average to household disposable income.
"Unfortunately, we weren't willing to go out and spend this extra cash, with the savings rate skyrocketing to 19.8 per cent as households prepare for what they expect to be further difficult and uncertain times ahead," says Rumbens.
"Looking forward, some parts of retail are expected to take longer than others to recover. Supermarkets, specialty food and liquor, household goods, and other retailing have already exceeded December's pre-COVID spending levels for spending over a whole quarter.
"However, it is expected to take much longer for department stores, catered food and apparel to reach this benchmark."
Updated at 1.00am AEST on 10 September 2020.