While Christmas sales are looking good for 2022 with consumers spending close to $66 billion, the outlook for retailers is changing fast, the latest Deloitte Access Economics Retail Forecasts edition shows.
“Despite increases in the cost of living, retail remained buoyant through the September quarter, with nominal retail turnover increasing by 2.3 per cent,” says David Rumbens, Deloitte Access Economics partner and principal report author.
“However, cracks are beginning to appear with growth in sales volumes slowing to just 0.2 per cent.”
“While the poor sentiment hasn’t been fully reflected in spending yet, it will only be a matter of time before spending growth moderates further. Internationally, spending has already dipped, with nominal retail spending in the US decreasing by 1.3 per cent and UK sales volumes decreasing by three per cent over the September quarter.”
“For now, we’re expecting the holiday season and end-of-year events to throw the retail sector a lifeline. Year-to-December growth in nominal retail sales is expected to grow by 10.4 per cent. But most of this is expected to be driven by prices, as retailers try to maintain their margins by passing on rising costs. Retail prices are anticipated to grow by 7.6 per cent over the year to December.”
Rumbens adds that sales are expected to curtail at the start of 2023. The result could see the sector entering a short and shallow ‘retail recession’ with sales volumes anticipated to decrease by 0.2 per cent and 0.4 per cent over the March and June quarters of 2023, respectively, and few retail categories are expected to be spared with a wide sweeping reduction in demand expected.
“Sales are likely to pick up through the second half of 2023 but result in a bottoming at zero real growth over the year to December 2023. So, a more sombre 2023 after a sprint to Christmas in 2022.”
