Retail trade growth to soften in December; trade turnover to increase

Retail trade growth will slow in the lead-up to Christmas, according to the AFGC CHEP Retail Index. The Index predicts just 3.2% year-on-year growth for the December quarter - a significant reduction from the 4.8% growth in the September quarter.

However, it’s not all bad news: retail trade turnover is still expected to increase from $23.26 billion in September to $23.35 billion in November.

While the clothing retail sector suffered due to the warmer-than-average winter, the food and household goods sectors recorded year-on-year sales growth of 5.5% to August 2014.

Retail trade turnover ($millions). Source: Deloitte.

“Looking ahead to Christmas, the AFGC CHEP Retail Index indicates the trading year will finish weaker than it began, although traditionally the food and grocery sector is more buoyant at Christmas than other sectors,” said Australian Food and Grocery Council (AFGC) CEO Gary Dawson.

“Interest rates remain low but consumer sentiment hasn’t recovered significantly since the May Federal Budget. Rising unemployment is also having a dampening effect on retail trade growth and a lift in the labour market is needed to underpin a stronger rate of income growth and therefore retail spending,” CHEP Asia-Pacific President Phillip Austin said.

Year-on-year growth. Source: Deloitte.

“It is encouraging to see the Index anticipating continuing year-on-year growth for the important December quarter. With a range of factors driving variability in this seasonal quarter, CHEP is actively collaborating with manufacturers and retailers to deliver certainty to their supply chains as they look to maximise on-shelf availability.”

The AFGC CHEP Retail Index is a collaborative project between the AFGC and CHEP Australia, powered by Deloitte. It uses CHEP transactional data based on pallet movements and is a lead indicator of ABS Retail Trade data.

The Index is available from www.afgc.org.au and www.chep.com.