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Why retail businesses will face a challenging period

Australian retail turnover has continued to grow through June, with the Australian Bureau of Statistics revealing a 0.2 per cent increase for the month marking the industry’s sixth consecutive month of growth.

National Retail Association Chief Executive Dominique Lamb said the slight increase was expected as the nation continues to adjust to inflation and rising interest rates.

“On the surface the numbers show the sector performing well, but underneath we know the rise in turnover is directly attributable to the rising cost of goods and services.

“Retail businesses have a challenging period ahead as rising interest rates and rising costs of groceries are impeding sales volumes.

ABF media

“The impact of interest rate hikes will come to a head for many family-run and small business operators, who are struggling to keep up with the rising costs of business and dwindling consumer confidence.”

Across the sub sectors of retail trade, only dining and food services saw a noticeable growth of 2.7 per cent, which is because of the price increases the industry has had to pass on to consumers to cover the costs of doing business.

Clothing, footwear and personal accessories saw the second highest growth of 1.3 per cent.

Ms Lamb said this can be attributed to the lipstick effect.

“Consumers are riding the waves of inflation in their own way, some are steering clear from discretionary spending and others are treating themselves when they can.

ABF media

“However, taking into account the consumer price index rise of 1.8 per cent, we will see consumers spending less in the coming months.

“Small businesses need to see more support from the government to get through these low spending periods and the NRA will continue to advocate on this matter to ensure our local and family-owned businesses stay alive.

“Decision makers need to be aware that there are thousands of small businesses who are still doing it tough, despite the supposed growth in revenue for the industry.”

Source: NRA

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