Lending Association

Black Friday sales surge leads to December retail decline

If the 2022 experience is any indication, the impact from the surge in retail sales in November, due to the ‘Black Friday’ sales event held by many chains and stores, will prove to be a temporary benefit. December retail sales are expected to fall as shoppers brought forward their purchases.

Last year, a 1.4% rise in retail sales in November ($510 million) was more than reversed by a 3.9% slide in December ($1.228 billion). Shoppers simply took advantage of the Black Friday sales and price cuts to bring forward their planned purchases, which helped depress retail sales growth for most of the next year.

The Black Friday event in 2022 proved to be a ‘pyrrhic’ victory for retailers as the Reserve Bank’s rate rises and sliding household incomes hit consumer confidence and spending for all types of products, even the usually reliable food and cafes and takeaways.

A year later, Australian Bureau of Statistics data for November retail sales revealed a higher 2% rise, which more than reversed the 0.4% drop in October and September’s 1% rise during a series of one-off sales events by some retailers. The impact of the Black Friday event was again seen with sales rising $731 million to a new all-time monthly high of $36.511 billion.

Robert Ewing, ABS head of business statistics, said, “Black Friday sales were again a big hit this year, with retailers starting promotional periods earlier and running them for longer, compared to previous years. The strong rise suggests that consumers held back on discretionary spending in October to take advantage of discounts in November. Shoppers may have also brought forward some Christmas spending that would usually happen in December. The popularity of Black Friday events is affecting spending patterns in the lead-up to Christmas, causing more volatile monthly movements in seasonally adjusted data.”

The ABS reported rises in all retail industries in November, but spending on discretionary goods boosted by Black Friday sales drove most of the increase. Household goods retailing rose 7.5%, followed by department stores (4.2%); clothing, footwear, and personal accessory retailing (2.7%); and other retailing (1.1%).

“Retailers told us that the success of Black Friday sales was boosted by consumers seeking out discounts in response to cost-of-living pressures,” Mr. Ewing said.

Both food-related industries rose in November, with cafes, restaurants, and takeaway food services, and food retailing each rising 0.4%.

Retail turnover grew across the country with large rises in all states and territories. South Australia (2.8%) had the largest rise, followed by Victoria (2.4%), after both states recorded falls in October.

“It’s clear that spending during Black Friday sales continues to grow across the country, with retail turnover increasing by more than one percent in all states and territories,” Mr. Ewing said.

However, whether it’s a success or another one-off won’t be known until the December retail sales data is released at the end of this month.

Meanwhile, a burst of approvals for non-private dwellings (home units, townhouses, etc.) saw total approvals rise a modest 1.6% in November, slowing from the 7.2% jump in October.

ABS head of construction statistics, Daniel Rossi, said in Tuesday’s release that “approvals for private sector dwellings excluding houses increased 6.7%, following a 17.4% rise in October. Approvals for private sector houses fell 1.7%, following a 2.9% October increase.”

Despite the monthly increase, he said total dwellings approved have been lower this financial year. In original terms, 70,900 dwellings were approved between July and November in 2023, compared with 81,954 over the same period in 2022.

Total dwelling approvals increased in Victoria (up 7.8%) and South Australia (up 6.0%). Falls were recorded in Tasmania (-22.6% – a small market), Queensland (-14.6%, a bigger market), New South Wales (-6.9%), and Western Australia (-5.5%).

Approvals for private sector houses were driven by falls in Western Australia (-2.8%), Victoria (-2.3%), and Queensland (-0.4%), with small gains for South Australia (+0.8%) and New South Wales (+0.6%).

The value of total building approvals fell 9.2%, following an 8.1% rise in October. The value of total residential building fell 2.1%, made up of a 2.0% drop in new residential building and a 2.4% fall in alterations and additions.