A new report has provided a bitter-sweet snapshot of the Australian retail industry as it begins to claw back.
The latest research from the Deloitte Access Economics Retail Forecasts, covering the March 2013 quarter, has revealed that while the retail environment remains an extremely competitive one, there are signs of positive growth.
According to the study, the March quarter 2013 retail sales survey results were “stunning”, and delivered the strongest quarterly result for six years, with growth of 2.2 per cent in real terms.
Over the past year, non-food retailing has also overtaken food retailing as the stronger growing segment – the outcome one might expect in an environment of record low interest rates.
However, experts behind the report have warned that rate of sales growth is unlikely to be sustained for any length of time, with data for the month of April confirming much more modest retail sales growth in that month.
Deloitte also confirmed that while employment growth is registering a pulse, it’s a faint one, with the unemployment rate likely to increase over 2013 hindering retail sales growth.
Consumers have also become less confident over the past couple of months, according to the firm, as the Reserve Bank has “started to push the panic button, and as that symbol of economic supremacy (the Australian dollar being worth more than the US dollar) has quickly slipped away”.
Over time, however, the report indicates that those low interest rates and a lower Australian dollar are a combination which should work in the favour of Australian retailers, in large part as the housing cycle turns and favours more spending on consumer durables.
Commenting on the recent sore point of this year’s Federal budget, the report notes that there are unlikely to be “too many easy yards” for retailers over the years ahead, with range of measures in the latest budget set to cut into disposable income, particularly form 2014-15.
By financial year, however, real (inflation-adjusted) retail sales growth is expected to record a gain of 3.0 per cent in 2012-13, driven largely by the strong period seen at the start of 2013. Retail growth is then expected to moderate a little in 2013-14 (2.8 per cent), before improving to 3.0 per cent again in 2014-15 as employment growth moves to a higher path.
Deloitte Australia is the Australian partnership of Deloitte Touche Tohmatsu. As one of Australia’s leading professional services firms, Deloitte Touche Tohmatsu and its affiliates provide audit, tax, consulting, and financial advisory services through approximately 6,000 people across the country.