Food retail sales fall but restaurants get a boost

Posted by Isobel Drake on 9th September 2009

Australian retail sales fell in July, led down by a softer performance from the food retail sector. The restaurant, takeaway food and café sector posted another improved performance, however, in a sign that soaring consumer confidence is boosting interest in eating out after a year in which the ‘cocooning’ trend became a major talking point.

On seasonally adjusted terms, food retailing sales were down 1.9 per cent, while restaurants, cafés and take-away stores recorded a one per cent lift in sales.

Just a few months ago, the food retailing category – which includes grocers, supermarkets and specialty fresh food retailers – was one of the leaders of strong retail sales, with the restaurants and cafés category one of the laggards – according to the data.

Food retailing is, of course, relatively stable, as consumers will always need their groceries no matter what the economic circumstances. It’s boost during the slowdown was linked to increased demand for at-home meal options as consumers cut costs. Such a trend was alarming for the restaurant industry, in particular, but today’s data, combined with improving consumer confidence, suggests that the worst may now be behind the industry.

Stimulus over, consumers on their own

The overall fall in retail sales for the second month in a row was a signal of the end of the stimulus effect of the cash handouts, the Australian National Retailers Association said today.

“The recent rebound in consumer confidence is not yet flowing through to Australian checkouts,” ANRA CEO Margy Osmond said. “Confidence is rising but spending is lagging.”

“It’s clear we don’t need anything that will damage consumer confidence, especially in the lead up to Christmas. The big risk is an increase in interest rates. If they start rising, people will cut back their spending,” Mrs Osmond concluded.