Rising fuel and supply chain costs are driving many retailers across Australia to reduce staffing according to a new survey by the Australian Retail Council (ARC).
ARC's Pulse Survey results show almost six in ten businesses (58 per cent) say current conditions are leading to staff reductions.
One in ten (11.1 per cent) are reporting significant reductions in staffing levels, while no businesses are reporting increasing employment.
This comes as 90.6 per cent report increased freight costs, with more than half facing increases above 10 per cent and nearly one in five above 25 per cent.
Two in three (67.2 per cent) say higher fuel costs are hitting them significantly or very significantly.
Just over half of retailers (55.6 per cent) are absorbing at least some cost increases, with one in four (24.8 per cent) saying most or all costs will be passed on to customers.
These headline results have led to the ARC to call for an urgent temporary reduction in the diesel fuel excise.
ARC CEO Chris Rodwell said the data reflects the sector is facing a tough period ahead and highlights the seriousness of the cost crisis affecting Australia’s retail community and the wider economy.
“Retailers are being hit hard by the sharp increase in costs at the same time as consumer confidence is at a record low,” Rodwell said. “The fact that businesses plan to adjust staffing levels and are warning about viability if conditions persist, shows the scale of the challenge ahead for a sector that represents just under one-fifth of the economy.”
Rodwell added that the retail community welcomes recent efforts to secure fuel supply. However, he said further support is required and it’s clear that a temporary reduction in diesel fuel excise is an immediate, practical step the Government can take to ease pressure across supply chains and support jobs.
“These options will help alleviate challenges faced by retailers and the broader economy and represent a much better alternative to other measures being considered that would only exacerbate the problem,” he continued.
“Retailers are especially concerned with the prospect of widespread, state-based work from home mandates as they would significantly disrupt how Australians shop and make it much more difficult for many retailers, especially small and medium-sized businesses, to survive.”
Alongside staff reductions, a vast majority of retail businesses (82.8 per cent) say a prolonged disruption would cause serious impact to profitability, with one in three (34.5 per cent) saying it would threaten the viability of their business or force closure.
Less than one in ten (7.8 per cent) say they would need to close if conditions continue for several months.
ARC's survey also shows the outlook on retail is deteriorating, as 96.6 per cent expect conditions to worsen over the next 12 months.
More than half (50.4 per cent) say supply chain challenges are currently having a significant or critical impact.
All this is pushing a majority of retailers to call for stronger action to secure global fuel supply and support a temporary reduction in fuel excise on diesel.
Rodwell said retail is a key bellwether for broader economic conditions, and the signs point to serious and immediate challenges to business viability.
“Retailers are telling us they are facing an uncertain outlook, while facing an immediate and significant increase in the cost of doing business,” Rodwell said. “When you combine these two factors, it leaves many business owners with very little room left to move.”
Retail employs around 1.4 million Australians, and is valued at $144 billion. Rodwell said that without action, rising costs will continue to flow into prices, job losses, and business closures, which will impact the broader economy.
“Retailers need practical support,” he said. “Alongside immediate relief through measures like a temporary reduction in diesel fuel excise, there must be a stronger focus on reducing red tape, removing regulatory fragmentation, and cutting compliance costs across the economy to lift productivity and support business resilience.”