New data from retail spending analyst Retail Mosaic shows Australian retail sales rose 1.2% for January 2024. However, half of retail categories were in decline including alcohol, with sales falling 1.1%.

“Endeavour reported a positive start to 2H24 and are likely winning market share. Coles had a negative start,” Retail Mosaic said.

Takeaway food sales rose 5.1% and cafés and restaurants were up 0.7%, with Retail Mosaic noting that consumption is shifting towards takeaway foods.

“Trading updates from a number retailers highlight stabilisation in sales trends more recently, but still at a weak level of growth,” Senior analyst Craig Woolford noted. “We expect soft trends to persist for some time. 

What Retail Mosaic is seeing and hearing in retail

• Retailers still protecting gross margins, helped by cleaner inventory and lower input costs. Retailers are likely to budget for higher gross margins given elevated operating cost growth.
• Very few retailers have flagged any concerns around freight rates and impacts on inventory. This may be because retailers have contracted rates for the next 4-6 months. It will be a potential headwind if the Red Sea conflict overseas continues.
• Generally, conditions have been warmer and wetter than last year. Sales feedback on February has been slightly stronger than January and may reflect drier and warmer weather than in January.

Hospitality industry hit hard by slowing economic growth

According to the ABS Australians ate at home more in the December quarter. Household consumption rose a meagre 0.1%, following a fall of 0.2% last quarter. Spending on food rose 0.9% while spending on catering services, pubs and clubs dropped off. Total discretionary spending by households fell 1.6% over the year.

ABS head of national accounts Katherine Keenan said: “Households upped their spending on essential items like electricity, rent, food and health. Meanwhile they wound back spending in discretionary areas including hotels, cafes and restaurants, cigarettes and tobacco, new vehicle purchases and clothing and footwear.”