Retailers rejoice over extended trading after November sales slide

New retail sales figures show sales slid by 0.1% in November, but the December figures could see a significant turnaround after retailers sang the praises of extended trading hours.

According to the Australian Bureau of Statistics, retail turnover fell 0.1% in November following a flat result in October.

The largest contributor to the fall was household goods retailing (-0.9%) followed by clothing, footwear and personal accessory retailing (-0.6%) and department stores (-0.4%).

The fall was partially offset by rises in “other” retailing (1%) and cafés, restaurants and takeaway food services (0.3%).

But over the longer term, food retailing remains the strongest performing industry, up 0.4% in trend terms.

“The figures indicate that there remains a lack of consumer confidence due to tax hikes, increases in utility bills and private health insurance,” says Russell Zimmerman from the Australian Retailers Association.

“There appears to be a lack of business certainty in the buildup to this year’s federal election… Interest rate cuts are needed, but so is economic leadership.

“The increase in both month-on-month and year-on-year growth in the cafés, restaurants and takeaways category correlates with the beginning of the Christmas party season.”

Westpac economist Elliot Clarke also commented on this category, pointing out the gain in November was solely due to a 1.2% increase in takeaway activity.

“In contrast, café and restaurant activity fell 0.4%. Arguably, this is further evidence of consumers economising, favouring eating at home over eating out,” he says.

Meanwhile, Clarke says “big ticket” discretionary retail has been weak over the past year, and this continued in November as household goods retailing declined by a further 0.9%.

Overall, the November result is “best characterised as poor”, Clarke says.

“As the year drew to a close, consumers were clearly hesitant to spend any increase in disposable income,” he says.

“Despite another rate cut, confidence deteriorated again in December. As such, retail sales growth looks set to remain weak through December and into the new year.”

While Clarke paints a gloomy forecast for December retail sales, retailers and shopping centres have highlighted the success of extended trading hours in the final days before Christmas.

For the first time, Westfield shopping centres in Sydney’s Parramatta, Brisbane’s Chermside and Adelaide’s Marion opened on December 20 for 33 hours of uninterrupted trading hours.

Speaking to The Australian Financial Review, several retailers said sales during those extra trading hours made for up any higher running costs incurred as a result of being open longer.

But according to Zimmerman, there is “not a real lot of consistency” around extended trading.

“I think from a retailing perspective, if there was a little bit more discussion and coordinating of those trading hours, it would work much better,” he says.

Zimmerman also raised concerns about the impact of extended trading hours on small retailers.

“We don’t believe you should force retailers to trade if it’s not profitable for them to do it. Once you get past 9am to 6pm on the normal Monday to Friday, you have to start paying penalty rates,” he says.

“Also, mum-and-dad businesses might be trying to get the same three or four people to do 33 hours straight, and that would not be good.”

But that’s not to say small retailers can’t extend their hours at all, Zimmerman says.

“If all those businesses report good sales and it works really well, naturally that’s going to encourage those smaller retailers to do from, say, nine until midnight and then come back in the morning,” he says.

“It’s going to encourage small retailers to open if it works well.”