Consumer sentiment continues to drift downwards while retail spending growth has picked up over the same time period, according to the latest Deloitte Access Economics Retail Forecasts report.
The report revealed that retail pricing continued to struggle in the face of improved volumes.
Retail price growth was minimal, notching an increase of 1.0% over the year to June 2017. This was attributed to Intense competition keeping all retailers focused on delivering customer value at the least cost possible.
The report stated that the entry of Amazon and other international online retailers will only put further downward pressure on prices.
Deloitte Access Economics partner David Rumbens said consumers were dissatisfied with the current retail landscape, despite improvements within employment.
“Strengthening employment outcomes are providing the basis for spending to lift, including a rebound in full-time jobs growth and continued wealth gains from housing.
“But consumers aren’t happy. Despite improvements in unemployment expectations and an increase in business confidence, consumer sentiment is at a low point with concerns over financial risks.
"And in the face of oncoming competition from the likes of Amazon, widespread aggressive discounting to lure in the consumer dollar, and rising energy prices, it’s likely retailers aren’t so happy either.”
“Nominal retail spending growth for the year to June 2017 was 3.6% and we expect it to remain steady at that rate over the year to June 2018.
"However, more of the growth next year may come from volume growth, with prices increasingly under pressure. Retail volume growth for the year to June 2017 was 2.5%, rising to 3.4% for the year to June 2018.”
Between December 2016 and July 2017, full-time jobs rose by 1.9%, while part-time jobs grew by just 1.3%. This was a substantial turnaround when compared with 2016, during which the absolute number of full-time jobs declined.
Real retail turnover over for the June quarter was surprising, reaching 1.5%, which is the highest real growth result since the March quarter in 2013.
This follows a subdued start to 2017 for retail spending growth.
“This signals an improved spending outlook after three months of negative turnover growth in the last year,” Rumbens said.