Tom Kierath,analyst for investment bank Barrenjoey,toldThe Age andThe Sydney Morning Herald both suppliers and retailers had started to raise the alarm over worsening retail conditions. Discretionary spending has dropped 10 per cent over the past month,and conditions areunlikely to improve anytime soon.
“We’ve been predicting for a while that the retail would come off as people start to spend their money elsewhere,but feels like now it’s actually happened,” he said. “And it’s going to get tougher because the pressures on the consumer are getting worse.”
Retailers have warned shoppers and investors about rising costs over the past 12 months. However,this year has brought inflationary pressures sharply into focus,with raw material shortages,fuel price spikes and shipping cost increases all contributing to the highest level of annual inflation in the past two decades.
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Compounding this are further pressures affecting shoppers’ wallets,including rising interest rates and power prices. The reopening of international travel has also prompted more spending in non-retail categories.
Retailer Mark Mezrani,who operates 50-odd Kidstuff stores around the country,agrees that any COVID-related benefits for retailers appear to have worn off,and the outlook is increasingly grim.
“There’s no doubt the Australian consumer is starting to get the message that the party’s over,” he said. “The things that were fuelling spending – government support,low interest rates,low energy prices,house prices rising – every one of those indicators have now reversed.”