Australian retailers brace for worst Christmas since 2013
today Nov 13, 2019
Sentiment among Australian retailers has slumped to its lowest in six years, with a fifth fewer forecasting a pick-up in sales in the Christmas period than a year earlier, a survey of retail executives showed on Wednesday.
Just 62% of retailers expected to grow sales in the holiday gift-giving season that runs through December, down from 80% a year earlier and the weakest result since 2013, the survey published by market researcher Deloitte Touche Tohmatsu Ltd said.
The reading suggests a series of economic jumpstarts has failed to ignite Australia’s retail sector amid competition from cheaper global online entrants like Amazon.com Inc and soft consumer spending due to wage stagnation and a property downturn.
In July, a federal government income tax cut took effect, while the Reserve Bank of Australia sought to encourage spending with three interest rate cuts in June, July and October to a record low of 0.75 per cent.
“Sales volumes are down and as yet the benefits of the federal government’s tax cuts have not had the stimulus that retailers were hoping for,” Deloitte said in a report on the survey of 54 retail executives.
“Interest rates continue to fall, and these have not yet resulted in an improvement in overall sales,” the report added.
Retail volumes have fallen in three of the past four quarters to be down 0.2% from a year ago, according to Australian Bureau of Statistics data, the weakest annual volumes since the early 1990s recession.
Just 40% of respondents in the Deloitte survey said they expected to grow their profit margin in the Christmas period, and about the same amount planned to discount store prices. In 2012, just 19% of retailers planned to discount in December, Deloitte added.
Nearly half of respondents reported flat or negative sales growth in the past year, and the percentage of retailers forecasting a pick-up in sales in calendar 2020 fell to 72% from 90% a year earlier.
“Australian retailers will be waiting for a recovery in wage and jobs growth to provide a boost where interest rates and government tax cuts fail to provide the stimulus needed,” said David White, national leader of Deloitte’s Retail, Wholesale and Distribution Group, in a statement.
© Thomson Reuters 2019 All rights reserved.