Deloitte is predicting a tough year for Australian retailers, stating that a change is coming in 2019. According to the company’s predictions from its Deloitte Access Economics’ latest quarterly Retail Forecasts subscriber report retail turnover growth will slip from 2.2 percent to a modest 1.6 percent in 2019.
While in the past retailers have benefited from customers living beyond their means, housing-market pressures and flat income growth is predicted to hurt household budgets.
“Australia’s retail sector has been sustaining a reasonable rate of sales growth in an unconventional way. Not so much from income growth but leveraging off consumers’ willingness to spend. That willingness to spend has been supported by very strong asset-price growth, creating a massive windfall for one set of consumers. But, for another and largely separate group, they have been associated with a significant lift in debt commitments,” said David Rumbens, Deloitte Access Economics partner and Retail Forecasts principal author.
On the bright side, 2020 is looking better, with the market expected to return to 2.2 percent after the housing market adjusts.
“It shouldn’t just be about survival,” he said. “Retailers should ensure they’re focused on competitive advantage. They should strengthen connections with customers and streamline operations. This means that, when broader market growth does return, they’re in the best possible position to take advantage of it.”
