The retail sector is bouncing back

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The retail sector is bouncing back

By Bev Strickland, Managing Director of Brisbane’s digital marketing consultancy Strictlymarketing.

While COVID-19 restrictions and lockdowns through 2020 resulted in the retail sector sustaining its hardest hit in living memory, there are already strong indicators it will bounce back faster and stringer than many had believed.

With the onslaught of COVID-19, few industries experienced the seismic shift in demand as the retail, consumer goods and household consumption sectors in the first half of the year.

Yet this has shifted to return to healthy levels much faster than many anticipated and is a positive signal for economic recovery and improved employment.

Forecast recovery in retail spending

While retail sales data for December is not yet available, the Australian Bureau of Statistics revealed retail trading in November increased 7.1% month-on-month and was a staggering 13.3% higher than November 2019.

This is in alignment with Deloitte Access Economics’ latest quarterly Retail Forecasts subscriber report for Q4 2020, which explains that retail spending “surged” in the September quarter by 6.5% and was expected to jump by 2.6% in the December quarter.

David Rumbens, Principal Author of the Deloitte report, said retail spending had proven to be an area of strength for the Australian economy through recovery from COVID-19.

“With social restrictions easing, and a measure of pent up demand unleashed, retailers experienced a surge in spending volumes over the September quarter,” Rumbens said.

“Retail’s strong performance is due in part to opportunity – consumers aren’t able to spend as much on travel and other services – as well as changing preferences – consumers are spending more on home-centric goods.”

The result is retailers are capturing “a greater share of the consumer wallet” which the report says is “likely to linger” on the back of continued restrictions and consumer reluctance continuing to create a barrier to transport and accommodation spend.

At the start of the COVID crisis in Australia in Q1 2020, traditional non-discretionary categories including food and sanitary product sales, flourished in a frenzy of panic buying.

Surprisingly, some non-discretionary spending on furnishing, electronics, and DIY actually surged as workers stayed home and looked for projects to keep themselves distracted. Similarly, active and casual wear retailers along with butchers, bakers and other food retailers, are performing exceptionally well.

The sectors hardest hit were the truly discretionary categories such as hair, cosmetics and fashion, while the domestic and international recreational travel sectors were all but forced to shut down completely in Australia.

Changing tide points to recovery

But the tide has turned and I believe we will see a faster recovery than expected in the retail sector as restrictions continue to ease and the psychological and physical need to shop kicks in. This will particularly be the case in non-discretionary spending and the home improvement sectors.

Many households where employment was unaffected by COVID, are now sitting on extra cash than usual because they have not been able to eat out or travel domestically or internationally to the same extent they were at the start of 2020.

Interest rates are at record lows across Australia, government incentives for home improvements have seen a rapid increase in this sector which had already flourished during COVID, and Aussies are looking for ways to spend the money saved this year from what would have ordinarily been discretionary spending.

The combination of improved property repayment affordability, additional cash in the bank and the wariness to travel internationally opens the way for increased spending most likely to continue in the areas of household improvements and personal services.

Why it matters

PriceWaterhouseCoopers’ Where next for retail and consumer? How the retail and consumer industry can reboot for a post-COVID 19 Australia explains that the retail and consumer goods sectors combined, accounted for 15-17% of Australia jobs in 2019.

As such, healthy retail and consumer good sectors are “critical indicators for the health of the Australian economy as a whole”.

If the retail sector is healthy, the economy is healthy.

And the healthiest areas of the retail sector are those which were able to pivot their business to meet consumer demand. For example, 2020 proved to be a year of enormous growth for our client OMG Decadent Donuts which shifted from market stalls to a home delivery service and retailers who were able to boost their online presence and shopping capabilities.

Retail will change as a result of COVID-19. We will continue to see restrictions on how many shoppers can be in stores at any one time and more people than ever will continue turning to online shopping.

But fears Australia’s retail sector would take many years to recover from the damage inflicted by COVID, seem to have been unfounded and the sector is bouncing back quickly and strongly.

If you would like to know more about how Strictlymarketing can help you with retail and digital marketing for your business, give us a call on 07 3511 7516 or email us on