Discretionary retailers face tougher year in 2024

January 2, 2024

0 1 minute read

The Australian Retail Association (ARA) estimates that Australians spent $24 billion on Boxing Day Sales, an increase of 1.6% from last year.

As I noted on Sky News on Monday night, the result “tells us that Australians are actually doing it pretty tough at the moment”.

“That 1.6% increase in Boxing Day sales comes against a population increase of about 2.4% according to the Australian Bureau of Statistics. And we’ve also had inflation of around 5%”.

“So, once you strip those two things out of the equation, it basically means that real retail sales would have fallen by about 6% over that period”.

“And that effectively tells you that individual households have cut back on their expenditure and it’s only been offset by inflation and the huge growth in the population”.

It is also worth pointing out that retail sales volumes fell by 1.2% in aggregate terms, and by 4.5% in per capita terms, in the year to September 2023:

Source: Alex Joiner

Retailers in the discretionary space have been hardest hit as households have cut back on spending in the face of soaring mortgage and rent payments, and general cost-of-living:

Therefore, if it wasn’t for Australia’s record population growth, then the retail sector would be already experiencing a deep recession:

Australian real per capita household disposable income collapsed by 6% in the year to September 2023:

However, household consumption fell by less (-1.9%) than incomes (-6.0%) over the same time period:

This reflects the fact that households drew down on their savings, with the savings rate collapsing to a 15-year low in September:

With the household savings rate already near zero, real per capita consumption will inevitably remain weak, meaning 2024 will likely be an even tougher year for discretionary retailers.

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January 2, 2024

0 1 minute read