Australian retailers are being squeezed from both ends, with nearly half projecting falling revenue as fuel and freight costs surge, matching similar challenges across the wider business market in Australia.
New data from the Australian Bureau of Statistics (ABS) show the top concerns for retailers include supply chain disruptions and falling consumer spending over the next four weeks.
Four-in-ten (41 per cent) of retailers expect their revenue to decrease over the next four weeks, just behind wholesale trade in the lead at 51 per cent. This comes as 31 per cent of Australian retailers report supply chain disruptions, well-behind the agriculture, forestry and fishing industry where 42 per cent are seeing supply chain disruptions.
According to the Australian Retail Council (ARC), the new data from the ABS has confirmed what retailers have been telling the peak body for weeks.
“The official numbers are concerning, but our own retail data suggests the pressure is even sharper on the ground, particularly for smaller operators with less room to absorb rising costs," ARC's chief economist and chief policy officer Glen Fahey said.
“Retailers have done everything they can to shield customers, but that becomes harder when freight, fuel and compliance costs keep rising at the same time consumer demand remains fragile.
“This is exactly why retailers need practical relief, not more cost and complexity.”
ARC’s own recent retailer survey found three in four retailers said supply chain conditions had worsened in April, while two in three reported high or severe concern about the next three months.
More than three in five retailers reported shipping and freight cost increases of more than 10 per cent, while three in four said they were fully or partially absorbing those costs rather than passing them directly on to customers.
“Our own surveys show businesses are calling for practical measures that improve freight productivity, strengthen supply chain resilience, reduce energy and operating costs, and ease unnecessary regulatory burden so retailers can remain competitive and keep prices down,” Fahey said.
“Now more than ever, is the time to pursue the reforms that reduce the cost of doing business.”
Across all sectors, supply availability and the fuel crisis have negatively impacted 72 per cent of Australian businesses, ABS data showed.
ABS head of business statistics Tom Lay said this survey data highlights the economic impacts of the closure of the Strait of Hormuz on Australia.
“Businesses across all industries were impacted by rising fuel costs from global volatility and ongoing supply chain disruptions,” Lay said.
“One in six businesses experienced disruptions in their supply chain, with transport, logistics, agriculture and small businesses among those most affected.”
Over one third (36 per cent) of businesses reported revenue had dropped over the past four weeks, while more than a quarter (27 per cent) expect revenue to fall over the next four weeks. In retail, 41 per cent are projecting revenue slips over the next four weeks, which comes as 45 per cent report revenue slips over the last four weeks.
Half of all businesses also reported operating expenses had risen, with fuel prices and freight and delivery costs the most frequently reported reason. This was higher for medium sized businesses (56 per cent), compared to small (49 per cent) and large businesses (44 per cent).
In retail, 58 per cent have seen operating expenses lift, behind agriculture, forestry and fishing where rising expenses hit 79 per cent of businesses.