Food retail sales rise, restaurant and take-away outlets gain momentum

Posted by Editorial on 6th May 2009

Food retail sales rose again in March, according to the latest ABS data, but the rate of growth has fallen as restaurants and take-away outlets received a more substantial boost.

The Australian Retailers Association (ARA) said the 2.2 per cent growth in retail turnover for March was in line with predictions and showed signs of slow recovery as cashed-up consumers re-entered the market.

ARA Executive Director Richard Evans suggested the better-than-expected figures were the result of economic stimuli from late last year.

“The March growth was not a result of the recent Household Stimulus Package,” he advised. “Economic stimuli, including interest rate cuts and the Government’s stimulus funds, don’t impact the retail sector overnight – that is not the way the market works. ARA modeling indicates any change in interest rates or other economic stimuli takes between three and six months to affect the market.”

“Food retailing has been one of the strongest retail categories throughout the economic downturn but it showed the lowest rate of growth in March (0.4%),” Mr Evans noted. “However, growth in department stores (13.2%), clothing and soft goods retailing (6.4%), cafes, restaurants and takeaways (1.4%) indicated cashed-up consumers were slowly coming out of financial hibernation without guilt.”

For the March quarter, sales growth at cafes, restaurants and takeaways was a respectable 3%, suggesting that declines in restaurant patronage are moderating. While the food retail sector grew 1.3% for the quarter which, given the strong results of supermarkets, indicates that smaller specialist stores are under increasing pressure.

“Retailers remain optimistic about improved growth in the September quarter with the mitigating factor for economic recovery being employment. However, recovery will be patchy with retailers looking forward to more growth, but with some slow trade in the months ahead,” Mr Evans concluded.