The Australian Bureau of Statistic (ABS) just released a preliminary report that indicates that Australian retail turnover surged 8.2% in March.
Here are some details on the report and which ASX retail shares have benefitted from the surge.
Record retail turnover
According to the ABS, the increase in retail turnover is the strongest seasonally adjusted increase on record. The 8.2% increase in month-on-month turnover surpasses the 8.1% increase seen in June 2000, when households increased their spending before the GST was implemented.
Retail turnover in March 2020 was also 9.8% higher than turnover in March of 2019. Total turnover surged by $2.2 billion to over $30 billion for the month. The preliminary figures were the result of unprecedented demand in the food retail industry, with supermarkets and liquor stores experiencing strong sales.
Which ASX retail shares benefitted?
According to the report, supermarkets saw a 22% increase in consumer spending. The data showed that sales of essentials such as toilet paper, pasta, flour, and rice doubled in comparison to the previous month. in addition, turnover for canned goods, medical and cleaning products also soared more than 50% for the month.
Supermarket giants such as Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW) and Metcash Limited (ASX: MTS) all reported a material lift in sales growth. As a result, the demand saw supermarkets enforce buying limits on essential items.
The increased turnover was not only restricted to supermarkets. With a large portion of the workforce working from home amid the coronavirus crisis, consumers also increased their spending on home office supplies and equipment. Wesfarmers Ltd (ASX: WES) which owns Officeworks and Harvey Norman Holdings Limited (ASX: HVN) are 2 ASX shares also poised to benefit from the increased sales.
Which sectors struggled?
The preliminary data also pointed to strong falls in turnover among cafes, restaurants, and takeaway food services. Clothing, footwear, and personal accessory retailers were also victims of social distancing regulations imposed by the government.
With reduced turnover in cafés, restaurants, pubs and clubs, supermarkets are well positioned to grow their market share. A recent article in the Australian Financial Review pointed to how $9 billion in sales from the café, restaurant and takeaway sector could shift to the supermarket and grocery sector.
Foolish takeaway
The preliminary report indicated that the panic-buying and hoarding hysteria peaked in mid-March and that buying restrictions introduced by supermarkets will be seen in the next set of figures.
However, the coronavirus pandemic could have a lasting impact on how consumers shop and where they spend their disposable income. With people having to deal with job losses and uncertainty, consumers may opt for more conservative spending behaviour.
The impact of the coronavirus pandemic will not be brushed off quickly and essential services like supermarkets are preparing to adapt to this changing consumer behaviour.
