Retail trade holds steady but global risks ahead

The Australian Bureau of Statistics (ABS) has dropped its latest retail trade data and it shows that retail turnover dipped slightly by 0.1 per cent in December 2024, following on from a strong Black Friday and Cyber Monday shopping season in November. In spite of this drop, the ABS confirms annual growth remains solid at 4.6 per cent compared to December 2023.

In more good news for local retailers, quarterly retail volumes also increased by 1 per cent, indicating that while price discounting played a role in the sales results, more goods were sold overall.

What’s driving the numbers?

While a dip in growth is never cause for celebration, the December decline isn’t all bad news, it reflects changing consumer behaviour rather than a major slowdown. As Ivan Colhoun, Chief Economist at CreditorWatch, explains:

“Today’s data was good news for both inflation and stronger turnover volumes, albeit supported by price discounting and promotional activity. At the margin, this might suggest less need for the RBA to reduce interest rates.“

Colhoun suggests that while the data could indicate a less urgent need for a rate cut, the Reserve Bank of Australia (RBA) may still reduce rates in February to support economic growth and prevent unemployment from rising.

Retail breakdown: who’s up and who’s down?

Household goods & department stores – These sectors saw strong sales, likely due to discounting and promotional activity.
Clothing & accessories – Experienced a dip, indicating some caution from shoppers in discretionary spending.
Food retailing – Remains steady, with grocery spending a consistent performer.

Global factors to watch

While the local retail scene looks stable, bigger global shifts could have an impact on small businesses. Colhoun warns that markets are shifting their focus to Trump’s tariff wars, which could have ripple effects on:
A weaker Aussie dollar: making imported goods more expensive.
Higher inflation: pushing up costs for businesses.
Lower growth: as global trade slows.

“Markets and businesses will need to take views not only on the extent of tariffs being levied, but on their likely duration also. This is likely to be an unsettling time for business,” Colhoun suggests.

What does this mean for your retail businesses?

Prepare for price fluctuations: The impact of tariffs and a weaker Aussie dollar could make imported stock pricier. Consider locking in supplier agreements or finding local alternatives.
Monitor interest rate decisions: A potential rate cut in February could ease financial pressure on businesses with loans.
Stay agile with promotions: Consumers are clearly responding to big sales events, so leveraging key retail periods could help drive sales.

Graphs worth checking out

To get a clearer picture, check out these graphs on the ABS website:

Monthly Retail Turnover Trends – This shows how spending shifted between November and December.
Annual Retail Growth by Sector – Highlights which industries performed best over the year.
Quarterly Retail Volumes – A snapshot of how much product is moving off the shelves.

View the full ABS report here

Want more? Get our newsletter delivered straight to your inbox! Follow Kochie’s Business Builders on Facebook, Twitter, Instagram, and LinkedIn.