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Presentation: Retail sales outlook for 2024

Webinar presentation

24 January 2024

The link provides a presentation associated with a webinar we held. The webinar addressed the updated outlook for retail sales and key drivers that could trigger an improvement in spending. In the presentation, we also address the outlook for interest rates, price inflation and online sales. While tax cuts will help sales later in 2024, lower retail price inflation, higher unemployment and a shift of spend to travel will all limit the upside in industry sales growth. We also outline the challenging operating cost environment including higher wages and rents in the presentation.

Retail Forecasts for 2024

Mild rebound later this year

23 January 2024

Australian retail has had a difficult 2023 with below trend sales growth of 3.1%. We expect another challenging year with growth of 2.5% for 2024. While a weaker year, it will be a tale of two halves with softer growth in the January-June period and better growth for July-December. Moreover, we expect slowing sales in at-home food & liquor and a sharper slowdown in cafes, restaurants and takeaway food. We expect an improving rate of growth for non-food retail. While tax cuts will help sales later in 2024, lower retail price inflation, higher unemployment and a shift of spend to travel will all limit the upside in industry sales growth.

We provide a presentation of the retail outlook including the key factors to consider for the year ahead. We expect retail spending to be challenging in FY24e with an improvement likely in FY25e. Excess household savings, price inflation and interest rates are all factors to watch for the year ahead. Retailers are lowering inventory levels and looking for labour productivity initiatives to offset wage inflation.

Retail forecasts for FY24e

The downturn is here. What next?

20 July 2023

Australian retailers have begun to experience a slowdown in retail spending and it’s going to get tougher over the next 4-6 months. We expect FY24e retail industry sales to rise 1.5%, a slowdown from 9.0% growth in FY23e. While this may sound gloomy, a glass half full perspective is overall sales may not slow any further from the trends as at June 2023. The glass half-empty view is that we may not return towards trend sales growth until 2025. The willingness of households to tap into excess savings shapes our view that the downturn will be shallow. We also note that food inflation will prop up that sector until early 2024. The path of price inflation is likely to have a greater bearing on sales outcomes more so than retail volumes, which are already in decline.

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