Australian Retail Sales: March 2022 - The Consumer Strikes Back

About the author:

Alexander Mees
Author name:
By Alexander Mees
Job title:
Co-Head of Research and Senior Analyst
Date posted:
04 May 2022, 2:00 PM
Sectors Covered:
Gaming and Retail

  • Retail sales in Australia continue to outperform expectations. According to preliminary data from the ABS, retail sales rose 1.6% month-on-month in March 2022, 100 bps higher than market’s expectations of a 0.6% increase. Sales were 9.4% higher than in March 2021 at a record total of $33.6bn.
  • All retail categories were in positive growth on both a month-on-month (m/m) and year-on-year (y/y) basis. The best m/m growth was in Department Stores and Household Goods. The best y/y growth was in Clothing and Footwear and Other Retailing.
  • The strong growth in retail sales occurred despite the disruption from flooding and rising concerns about the cost of living. It is echoed by recent trading updates from retailers such as JBH and SUL, which have indicated a continuation of what JBH described as ‘heightened customer demand’.

Great, kid, don’t get cocky

Overall retail sales were 9.4% higher in March 2022 than in March 2021 and 12.0% higher than in March 2020, the month that COVID arrived in Australia. On a m/m basis, growth of 1.6% saw all major categories moving up, led by Department Stores, up 4.1% m/m, and Household Goods, up 3.4% m/m.

The slowest m/m growth was in Food & Drink and Clothing & Footwear, both up 0.5% m/m. Retail sales were also up m/m in every state except South Australia (down 0.7%), with Queensland comfortably the strongest, up 3.4% m/m.

Not so scruffy looking

Compared to March last year, most spending categories reported double-digit y/y growth. With socialising back on the agenda, Clothing & Footwear was up 14.3% y/y. This category was beaten only by ‘Other Retailing’, which includes pharmaceuticals, cosmetics and recreational goods, and was up 15.4% y/y.

March 2022 was the two-year anniversary of the onset of COVID and, unsurprisingly, most spending categories fared far, far better in March 2022 than in March 2020, with the notable exception of Food & Drink, which saw a panic buying-fuelled spike two years ago.

Many of the truths we cling to depend on our viewpoint

Today’s figures put Australia at odds with many other developed economies, which saw a sharp slowdown in retail sales growth in March.

Growth decelerated markedly in the US (from a long run of double-digit y/y growth), while retail sales in the UK actually slipped back into negative territory.

Difficult to see; always in motion is the future

Where do we go from here? The volume of public discourse about the cost of living has been amplified by the loudspeakers of the federal election campaign and yesterday’s hike in the cash rate by the RBA.

It seems unlikely that these worries won’t have weighed on consumer spending in April and May

Figure 1: Australian retail sales growth contrasts with the slowdown in other markets

Growth stocks have had a choppy ride since the onset of the pandemicRetail sales growth (y/y, sa) in the UK, the US and Australia. Source: ONS, US Census Bureau, ABS, Morgans.

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Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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