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Oz Retail Slumps As Delta Drags On

Delta lockdowns are hammering Australian retail, with monthly sales figures across the country dropping more than five per cent in July.

Data from Mastercard SpendingPulse (below) shows retail sales were down 5.6 per cent in July 2021 compared to June, and 6.3 per cent year-on-year, though are still up six per cent over July 2019. Clothing, department stores, and food retailing all fell month-on-month, with only household goods posting a modest 0.8 per cent gain; however, all categories were still down on a year-on-year basis.

Mastercard SpendingPulse, July 2021

According to Paul Zahra, CEO of the Australian Retailers Association, the delta variant of COVID-19 is continuing to cause pain for retailers, especially in Sydney which is now set for a nine-week lockdown with no confirmed end date.

“‘For lease’ signs are becoming a more common feature on CBD shop fronts in Sydney and Melbourne where the Delta devastation has been more severe and state and federal supports haven’t been enough to save businesses from closing their doors permanently.

“Lockdowns have a direct impact on retail sales as well as business and consumer confidence, and those impacts can be felt long after restrictions are eased, as it takes time for confidence and foot-traffic to build up again – it’s not an immediate snap back to the way things were,” he said.

Paul Zahra, ARA.

Zahra warns that lockdowns are taking their toll on both the financial and mental health of retailers, and consumer confidence and foot traffic both take a while to rebuild after lockdowns end.

“We need to be looking at ways we can reopen businesses where case numbers are low and vaccination rates are high as a pathway out of this situation.

“The insights also show that while consumer confidence has weakened as a result of lockdowns across various states, the 2-year growth mark ticked up. In states and territories such as Western Australia and the Northern Territory, where lockdowns are less common, 2-year growth is up 16.2% and 8.9% respectively,” he said.

SpendingPulse is based on Mastercard payment network data, as well as survey-based estimates for other payment types such as cash.

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