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.”
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.
In a significant development for the Australian banking sector, ANZ has successfully completed its $4.9 billion acquisition of Suncorp Bank. This strategic move, finalised on 31 July 2024, marks a pivotal expansion for ANZ, enhancing its service offerings and market reach across the nation. - read more
The Australian mortgage market is witnessing a notable shift as non-bank lenders increasingly capture a larger share, challenging the dominance of traditional banking institutions. This trend is driven by digital innovation and evolving consumer preferences, leading to a more competitive landscape in home financing. - read more
In its latest monetary policy decision, the Reserve Bank of Australia (RBA) has opted to keep the official cash rate unchanged at 3.60%. This decision reflects the central bank's cautious approach in navigating the current economic landscape, balancing the need to control inflation with the goal of sustaining economic growth. - read more
Westpac Banking Corporation is undertaking a significant transformation, focusing on expanding its business lending capabilities to better serve Australia's small and medium-sized enterprises (SMEs). This strategic shift involves replacing traditional in-branch tellers with dedicated bankers specialising in home and business lending, aiming to provide more personalised and efficient services to business clients. - read more
Loan Market Group's (LMG) Asset Finance Exchange (AFX) has achieved a significant milestone, reporting approximately $80 million in settlements within its inaugural year. This accomplishment underscores the increasing demand for asset finance solutions among Australian small and medium-sized enterprises (SMEs). - read more
Understanding the loan application process can be quite challenging. However, with the right tools, it becomes much easier to navigate. One of these essential tools is a loan calculator. - read more
Credit scores play a crucial role in loan applications, determining eligibility and interest rates for borrowers. Understanding how credit scores are calculated and the impact they have on loan applications is essential for anyone who wants to borrow smartly. - read more
Personal loans have become an increasingly popular financial tool among millennials in Australia. As the cost of living rises and life goals such as buying a home or pursuing higher education loom on the horizon, personal loans offer a means to achieve these goals with more immediate access to funds. However, the array of options and terms can be bewildering, making it crucial for young adults to approach borrowing with a prudent mindset. - read more
Credit scores play a crucial role in the financial journey of any individual, especially in Australia where they serve as a snapshot of your financial reliability. This numerical expression based on a level analysis of a person's credit files has a far-reaching impact on various aspects of financial borrowings. - 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
Certificate of Deposit (CD): A savings certificate with a fixed maturity date and specified interest rate, typically higher than a standard savings account.
