Retail growth slow with challenges ahead - ARA

NATIONAL retail spending saw a 3.6 percent growth (year-on-year) in April 2016, according to the Australian Bureau of Statistics (ABS), with food retailing posting a soft figure of 2.4% year on year.

The ARA believes this reported figure can be attributed to the competition between the major supermarkets and the increasing presence of discount retailer Aldi, causing deflation within the supermarket sector.

“With supermarkets accounting for nearly 50% of all retail sales, the soft increase of only 2.16% year-on-year in supermarkets contributed to the low growth of the retail sector of 3.6%” ARA Executive Director, Russell Zimmerman said.

The household goods category represents the highest growth figures at 5.8% (year-on-year), reflecting strength of the housing market and the resulting effect on consumer confidence.

Clothing and footwear has maintained a growth of 4.76% (year-on-year) due to heavy discounting - meaning volumes are up at the expense of margins. New players and competition entering the market has also had a significant effect on growth causing further discounting.

“The figures reported today by the ABS also highlight a number of trends in regards to state specific retail trade,” Mr Zimmerman said.

The large service sector based states (VIC 4.30%, NSW 4.95%) are growing strongly, while the traditional mining states (QLD 1.20%, WA 2.04%) are experiencing low growth as they go through a period of structural adjustment.

Tasmania has shown a particularly impressive growth figure of 5.85% (year-on-year), appearing to be off the back of a strong economy and robust tourism industry.

MONTHLY RETAIL GROWTH (March 2016 – April 2016 seasonally adjusted)

Household goods retailing (0.3%), Other retailing (0.2%), Food retailing (-0.3%), Clothing, footwear and personal accessory retailing (0.5%), Cafes, restaurants and takeaway food services (1.0%) and Department stores (0.4%).

Northern Territory (0.7%), South Australia (0.5%), Australian Capital Territory (0.9%), Victoria (-0.3%), Tasmania (1.0%), Western Australia (0.6%), New South Wales (0.3%) and Queensland (-0.1%).

YEAR-ON-YEAR RETAIL GROWTH (April 2015 – April 2016 seasonally adjusted)

Household goods retailing (5.8%), Cafes, restaurants and takeaway food services (3.0%), Food retailing (2.4%), Clothing, footwear and personal accessory retailing (4.8%), Other retailing (4.4%) and Department stores (3.6%).

New South Wales (5%), South Australia (3.4%), Tasmania (5.8%), Victoria (4.3%), Australian Capital Territory (6.8%), Western Australia (2.0%), Queensland (1.2%) and Northern Territory (1.6%).

 

About the Australian Retailers Association:

Founded in 1903, the Australian Retailers Association (ARA) is the retail industry’s peak representative body representing Australia’s $300 billion sector, which employs more than 1.2 million people. The ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia. For more information, visit www.retail.org.au or call 1300 368 041.

ENDS