December retail trade falls 4.4%, remains second highest figure on record

Retail trade fell -4.4% on-the-month in December, falling off after a sharp rise in October and November as lockdown restrictions were eased across major Australian cities. 

Five of six major retail industries fell, led by declines from department stores (-21.3%), clothing and accessories (-17.3%) and household goods (-9.3%). Food retailing, which includes supermarkets and liquor sales, was the only industry to rise, up 2.2%.

Ben James, Director of Quarterly Economy Wide Statistics said the decline is the largest monthly fall since April 2020. However, retail figures remain elevated, up 4.8% compared to December 2020. 

The decline was in part due to consumers shopping ahead of the busy holiday season because of concerns over shipping delays and product availability. 

A similar narrative unfolded last year, where December 2020 sales declined -4.1% on-the-month, after a 7.1% jump the month before. 

Why the big numbers don’t matter 

Resilient sales turnover figures fail to reveal the bigger underlying headwinds for retailers amid global supply-chain disruptions and elevated costs.  

Fourth-quarter reporting season has witnessed retail companies like Adairs (ASX: ADH), Woolworths (ASX: WOW) and Kogan (ASX: KGN) fall victim to upward cost pressures despite top-line figures remaining relatively intact. 

The three stocks mentioned fell -21.5%, -7.6% and -11.4% on the day of their business updates. 

Companies like Premier Investments (ASX: PMV) appear to have weathered the logistical challenges better.

All will be put to the test as February reporting season kicks off.