Australians spend less with retailers
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Retailers are continuing to struggle as Australian consumers funnel their money online and towards new cars, overseas holidays and restaurants.
Australian retail spending slumped 0.1 per cent in November, according to figures released by the Australian Bureau of Statistics on Wednesday.
The fall in spending disappointed retailers who were hoping for a strong Christmas sales period.
"November should be a good month for the retail sector, towards the end of the month at least people start to focus on what will be in Santa's sack," Australian National Retailers Association CEO Margy Osmond said.
"This didn't happen in 2012 and the result will send a chill through retailers' spines as they look to 2013."
Ms Osmond said it appeared consumers were increasingly doing their Christmas shopping online, with overseas-based retailers receiving most of the benefits.
"We know that Australians look for bargains overseas at peak buying times and it appears they have fully embraced overseas options early to ensure gifts arrive on time."
Commonwealth Bank chief economist Michael Blythe said Australians were still spending money, but less of it was going towards retailers.
"It appears consumers are being very selective where they spend and what they spend their money on," he said.
"We know they (consumers) are quite happy to get out there and buy new cars at record rates at the moment, and of course we have record numbers heading overseas and no doubt doing a bit of their retail spending there."
Household goods retailers suffered the biggest fall in sales in November, with spending down 0.9 per cent, which came on top of a 1.5 per cent fall in October.
Clothing stores (down 0.6 per cent) and department stores (down 0.4 per cent) also struggled in November while spending in the normally resilient food retailing section was flat in the month.
The only bright spots were a 0.3 per cent rise in spending in the cafes, restaurants and takeaway food sector and a 1.0 per cent rise in the sector marked "other" by the ABS, which includes businesses like newsagents, florists and chemists.
Among the states and territories, conditions were best in Victoria (up 0.3 per cent) and the ACT (up 1.0 per cent), while retailers in the Northern Territory (down 0.9 per cent) and South Australia (down 0.6 per cent) fared worst.
St George senior economist Jo Heffernan said the figures were surprisingly weak, given the series of interest rate cuts over the past year.
The Reserve Bank of Australia has cut the cash rate, now at 3.0 per cent, by 1.75 percentage points since November 2011, although the most recent move, a 0.25 percentage point cut in December, came after the period covered by the retail figures.
Ms Heffernan said more rate cuts may be needed before the retail sector picks up.
"The rate cut delivered in December should go some way to easing consumer caution, however, it is likely that another rate cut will be necessary in coming months to assist with sectors, such as retail, which remain soft," she said.