Retail spending has been growing through winter and that’s taking the sector closer to a turning point, according to Deloitte.
The September Deloitte Access Economics Retail Forecast suggests though, that high prices not the volume of purchases, are boosting growth.
Partner and principal report author David Rumbens said the sector has bounced back after Covid.
“Retail is still riding the post-pandemic high, with real retail spending growing 1.4 per cent through the June quarter after an already strong start to 2022.
“That left real sales growth up 5.5 per cent over the year, with the spending spree particularly centred around discretionary categories,” he said.
Retail faces challenges ahead
However, David recognised there may be a bumpy ride ahead.
“Cracks are starting to show as the economy faces a number of challenges,” he said. He pointed out that retail prices increased 4.8 per cent up to June with food and household goods carrying the biggest price rises.”
Overall retail price growth outweighed sales volume growth in both the March and June quarters this year.
“The price pinch will continue to be seen in retail over the next 12 months,” David said.
He is predicting a drop in sales of 3 per cent through the year to December 2022. In contrast prices will peak at 5.9 per cent over the same period.
“A slowdown in price growth will be little help against another turning point for retailers, when consumers shift further towards services spending,” he said.
Retailers need to have a good employee offer
Another hiccup for the sector is staffing.
“Retail job vacancies have more than doubled since May 2019 with no sign of slowing down. These positions aren’t being filled and employment in the retail industry is lower than in May last year, down 1.2 per cent,” David said.
He suggests there is room for savvy retailers to make headway in this space however.
“While the labour market is expected to remain tight, there are actions retailers can take to attract new talent and retain and excite the talent they already have,” he said.