Australian retailers have received some rare and welcome good news as they confront the threat from Amazon, with a bigger than expected bounce in sales during October.
Local shopkeepers have been struggling with a shrinking retail pie over recent months at the same time as overseas competitors enter the market trying to take a share of it.
The latest challenge is Amazon's Australian website launch this morning, with the global online shopping giant offering products across 23 categories and trying to take a big slice of the nation's $300 billion-a-year retail pie.
However, the Australian Bureau of Statistics data for October showed retail sales rose 0.5 per cent in that month, and September was revised up from flat to 0.1 per cent growth, showing shoppers are again spending more.
Food and footwear drive sales bounce
But it was not all good news, and certainly not for some shopkeepers.
The October figures beat modest analyst expectations (+0.3 per cent) but were driven by a big surge in cafe, restaurant and takeaway food sales (up 1.7 per cent) rather than shopping.
The best retailing categories in October were footwear and personal accessories (up 2.5 per cent), electronics (up 0.8 per cent), department stores (up 0.5 per cent) and supermarkets (up 0.5 per cent).
On the flip side, the peak in the housing market appears to be weighing on furniture and hardware sellers.
Newspapers and books also continue to be out of favour, with monthly sales plunging 2.3 per cent.
Things are more likely to get worse than better for retailers, according to ANZ senior economist Jo Masters, who points to the continued slowdown in new home building and intense competition.
"We continue to see headwinds for discretionary spending given the challenging combination of weak wage growth, record indebtedness, price rises for non-discretionary goods and services and more recently slowing house price growth and rising petrol prices," she wrote.
"Moreover, the opening of Amazon in Australia today is likely to keep pricing power under pressure."
