Christmas Bells Will Jingle For Australian Retailers But No Cash Register Meltdown This Time

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Confidence has finally returned to the retail sector, Deloitte’s Christmas Retailers Survey shows.

But it is more the knowledge of surviving the shopping season rather than a thrilling goods-flying-out-the-door bonanza Christmas.

The 60 retail sector senior executives surveyed by Deloitte expect a rise in overall sales but margins will remain flat.

Deloitte’s retail forecast report, called ‘Salvaging a tough year’, says this year has been patchy for retail sales, stepping down on average from the 2012 performance.

That’s true for the Australian economy as a whole which continues to work through a transition from resources project construction as a growth driver to other areas.

Deloitte points to good news flowing from low interest rates and a lower dollar: house prices improving; consumer confidence up; signs of better credit growth.

“Australia’s retail sector is likely to end 2013 in better shape than was seen during the middle of the year. But it still may be Christmas 2014 that brings a smile to retailers’ faces, rather than this year.”

Real (inflation-adjusted) retail sales growth is forecast to record a gain of 2.2% for calendar 2013, moving up to gains of 2.7% in 2014, and 3.3% in 2015 (supported by stronger wage gains).

The Northern Territory and Queensland currently lead the way with the strongest retail growth, supported by major resources construction projects which still have some time to completion.

However, retail growth out of Western Australia is slipping with its relatively greater exposure to minerals rather than gas projects, as mining companies try to reduce costs fast.

NSW retail has performed better than the national average as surging house prices have some spillover to more retail spending.

While a slowdown in resources project construction over the next few years will hurt, WA and Queensland should still see the strongest average retail growth.

Deloitte conducted the second edition of the Christmas Retailers’ Survey in September 2013.

Source: Deloitte

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