The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
As Australians continue to face a challenging cost of living crisis, economic analysts have prepared retailers for a rocky road ahead as the Christmas season approaches.
Over the last year and a half, the Australian retail sector has been navigating what might be described as a recession, mostly indicated by declining trade figures. This downturn presents significant obstacles for retailers as they head towards one of the busiest times of the year.
In a sobering analysis by Deloitte Access Economics, partner Dave Rumbens highlights that retail spending has consistently declined over six of the previous seven quarters. This decrease is compounded by high living costs, rising interest rates, and stagnant wage growth, leading to an overall grim economic outlook.
“We’ve seen retailers struggle significantly," said Rumbens. "Real retail turnover has dropped for eight consecutive quarters, and consumer spending has barely budged at a 1.3% increase over the past 12 months.â€
Data reveals that the national real GDP growth up to March was just 1.1%, the lowest rate outside pandemic years since the 90s. According to Rumbens, this is a clear signal that Australia’s retail industry has been in a persistent recession for 18 months.
Despite the bleak outlook, this contraction in the retail sector is not surprising, given the weakening job market and the rising number of business insolvencies. “On a per capita basis, the reality is even harsher with real per capita retail spending shrinking by 2.5% compared to last year and further declining by 6.3% since June 2022,†explained Rumbens.
The "economic horror show" does not solely impact retailers; it reflects a broader economic malaise. With real consumer spending on retail down by 0.6% over the year to June, Rumbens predicts a difficult period ahead, though he remains hopeful that future years might bring some relief.
The Deloitte report underscores that new financial relief measures, including energy bill subsidies and tax cuts, might help increase disposable income and improve retail turnover. “While retailers should brace for continued challenges through the holiday season, we anticipate some gradual recovery," said Rumbens. Predictive figures show real retail turnover growth potentially rising from 0.3% in 2024 to 1.5% in both 2025 and 2026.
The recent monthly Consumer Price Index report for July shows inflation easing down to 3.5%, and underlying inflation dipping to 3.8%. Such signs might be initial indicators of economic stabilization, offering a glimmer of hope for Australian retailers.
Amidst this “new normal†of cautious and value-focused consumer behavior, the path to recovery might be slow, but not unattainable. Retailers who can adapt to the evolving economic landscape will be better positioned to overcome the tumultuous times still expected before a more stable future in 2025-26.
Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.
The Reserve Bank of Australia’s latest retail payments update offers another useful snapshot of how households are managing everyday spending, card use and short-term credit. While payment data is not the same as loan approval data, it can still tell borrowers something important: the way money moves through a household each month can affect how comfortable a lender feels about future repayments. - read more
The Reserve Bank of Australia’s latest lending rate statistics are a useful reminder that personal borrowing costs can vary widely, even when the broader cash rate outlook appears steady. For households considering a car loan, debt consolidation loan or unsecured personal loan, the key issue is not simply whether rates are rising or falling. It is whether the loan being offered is affordable, suitable and competitive for the borrower’s circumstances. - read more
The Reserve Bank of Australia’s latest financial aggregates add another layer to an ongoing story for personal loan borrowers: consumer credit remains an important pressure point for household budgets, even as interest rate settings stay under close watch. - read more
Before considering a loan application, it's crucial to have a clear understanding of your current financial position. Start by noting down all sources of income, including salary, any additional earnings, or government benefits. This will give you a comprehensive view of your financial inflows. - read more
Applying for a loan can be a daunting process, filled with numerous requirements and potential pitfalls. However, avoiding mistakes is crucial to boost your chances of approval and secure the best possible terms. Making errors during your application can lead to unnecessary delays, higher interest rates, or even denial. - read more
Maintaining a good credit score is crucial for financial health. In Australia, a solid credit score can unlock better interest rates, higher credit limits, and improve your chances of loan approval. - read more
Need Help Finding a Loan?
Find out now if you qualify and compare
rates, offers and options from multiple lenders - without a credit check!
All finance quotes are provided free (via our secure server) and without obligation. We respect
your
privacy.
Knowledgebase
Prepayment Penalty: A fee charged by a lender if a borrower pays off their loan early.
No comments yet. Be the first to share your thoughts.