Retail sector drags small business sales down in July
- Growth in small business sales slowed to 2.4% y/y in July (down from 6.6% y/y in June)
- Traditional retailers such as clothing and fashion small businesses were hardest hit this month (-5.3% y/y)
- Travel and entertainment, trades and business services continue to outperform retail, with restaurants the true standout (+11.3% y/y)
- Small businesses in rural and regional areas continue to outshine counterparts in metropolitan areas
ANZ today released its Small Business Sales Trends monthly report which showed a slowdown in retail sales led to a drop in monthly small business growth, despite a strong performance from the restaurant and services sectors.
Small business sales were up only 2.4% y/y compared with the previous month’s growth of 6.6%, led by a 5.3% drop in retail sales. The business services sector and restaurants continued to outperform, with sales growing at 4.8% y/y and 11.3% y/y respectively.
The data is based on the value of credit and Eftpos transactions processed through ANZ systems and ANZ card transactions processed through other systems for businesses at least two years old with annual turnover less than $5 million. ANZ has approximately 20% market share of all card transactions.
ANZ General Manager for Small Business, Nick Reade, said: “Trading conditions for many small businesses have softened this month, which is in line with anecdotal evidence from many retailers who have said July was a tough trading month.”
“Traditional retailers were hit the hardest this month, with clothing and fashion small businesses down 5.3% y/y, and appliances and electrical small businesses down 1.6% y/y, while small homewares and furniture businesses were largely flat up only 0.5% y/y.
“We’re seeing a lot of consumer caution at the moment, with many people opting to save rather than spend. The effects are certainly being felt by many small businesses, particularly those in the traditional retail sectors where sales are significantly down,” said Mr Reade.
ANZ Senior Economist, Julie Toth, commented further on the data: “While overall growth softened, the trend in the services segments of small business continued a steady rise this month, with sales up 3.1% y/y. In addition to the strong restaurant sector, the other better performing industry segments were other food outlets up 5.3% y/y, and travel and entertainment up 6.9% y/y.
“Another upside this month was growth in sales for small businesses in rural and regional areas up 3.3% y/y, which continue to outperform metropolitan counterparts. This could be put down to the improving farming conditions in regional Australia as well as the exposure to mining activity, which is providing an offset to general consumer caution.
“We also found small businesses in Queensland (+3.2% y/y), Victoria (+3% y/y) and South Australia (+3% y/y) outshone the other states. Victoria's outperformance reflects its continuing relatively stronger population, employment and housing construction rates,” said Ms Toth.