Deloitte Access Economics Retail Forecasts’ lates edition shows that after four consecutive quarters of negative growth, Australia’s retail recession is finally over.
Yet, despite the good news, that doesn’t mark the end of hard times for retailers, admits partner and principal report author, David Rumbens.
“Retailers have really struggled over the past year,” he explains.
“2023 was the worst year for retail sales growth in a generation and retailers had to offer significant discounts to get customers in the door.”
However, 2024 is expected to be a tale of two economies, with the first half seeing a continuation of 2023, where consumers remain cautious and spending subdued. The second half may be more favourable.
“Households are still feeling the brunt of higher interest rates and elevated, albeit moderating, inflation. The January retail sales data released last week points to consumer caution. The sector only grew 1.1 per cent in nominal terms over the year to January 2024. This really highlights the weakness of 2023 and the fact that the recovery has not really kicked into gear yet.
“We expect consumer caution to continue into the first half of this year, with retailers expected to continue discounting to entice shoppers into their stores,” Rumbens adds.
“The second half of 2024, however, is expected to be a turning point for the Australian economy. Real wage growth and disinflation are expected to continue, the updated stage three tax cuts will loosen purse strings and interest rate cuts are likely.”
According to the report, next year is expected to build on the strength of the second half of 2024. Real retail turnover is expected to increase by 0.9 per cent and 2.2 per cent in 2024 and 2025, respectively.
