Despite a steady rise in retail spending, Australian retailers are still feeling the effects of low levels of consumer sentiment, driven by economic uncertainty and low job security.
Retail sales growth over the past six months has been outstanding, with the level of retail sales increasing by 2.8 per cent over the first half of 2012 – much better than the annual rate of growth seen over the previous two years.
However, consumer sentiment remains well entrenched in pessimist territory as consumers remain concerned about risks to the Australian economy and any retail recovery remains a somewhat fragile one, according to the latest Deloitte Access Economics retail forecast.
"Trend sales growth may be achieved over the next year, largely as interest rates remain low. But with weak employment growth at best, and continued legitimate concerns over the economic outlook, it is difficult to see spending growth move beyond that," said Deloittte Access Economics analyst David Rumbens.
After a dismal 2011, food retailing is now showing very strong outcomes, while spending on cafes and restaurants has also strengthened.
The biggest gains over the six month period have come from those sectors that had been performing worst – department stores (up 5.5 per cent) and clothing retailers (up 6.1% per cent).
"It is really only the household goods segment which has continued to struggle over the start of 2012, as housing activity has failed to yet find its spark and consumers remain wary of consumer durables purchases," Rumbens said.
"Looking forward, investment spending will still be a key driver for the Australian economy in 2012-13, and that will continue to favour the north and west. Job opportunities and wage growth are likely to follow those leads, as key supports for retail," he said.
