Retail sales to pick up over the next 2yrs

AAP
March 13, 2013

RETAIL sales growth is expected to gain momentum over the next two years, thanks to improvements in the housing sector and better economic conditions.
While sales trailed off towards the end of 2012, the retail sector is expected to post a 2.2 per cent increase in sales growth at the end of the current financial year, a Deloitte survey shows.

Growth is tipped to lift 2.5 per cent in the 2013/14 financial year before improving to 3.6 per cent in 2014/15.

“While the start of 2013 may see a soft demand environment continue for retail, there are some positive signs on the economic horizon,” Deloitte said.

Low interest rates had not yet worked their way through the economy, but asset price gains were becoming a positive support to spending as consumer confidence improved.

“Housing activity has finally started to lift and the household savings rate has levelled out, so future consumer spending growth should at least match income growth,” the report said.

Western Australia and the Northern Territory have been the standout retail stories over recent years, with WA retailers enjoying two years of strong sales and the Northern Territory recording a solid performance.

The New South Wales retail market, which has underperformed for some time, may be finally starting to lift thanks to deep interest rate cuts and signs of life in the NSW housing market, the report said.

A lower Australian dollar would be a useful catalyst after a dismal year of retail in Victoria, South Australia and Tasmania.

The report also showed that many retailers were increasingly focusing on containing their costs in order to stay viable.

A slowdown in wages growth in the retail sector suggested retailers were having some success in containing their cost growth in a tough environment.