Friday 27 January 2012

De-bunking The Reasons For Retail Downturn

We’ve heard them all – GFC, floods, unfair online competition, consumer confidence, savings mentality. There are many reasons put forward for the retail downturn, but are they all crap?
An analysis published this week points out that consumer spending is actually up 5.7% while retail spending, including food, is only up 2.1%. Take out food and discretionary retail spending is only up 1%. (Ed: we need to know how much of that 5.7% was things like electricity price rises, but, hey, let’s run with this for now.)
Why has retailing lost ground? The analysis by Citigroup’s Craig Woolford blames three factors –
1.       Travel by Australian consumers is taking 2.3%.
2.       Online retail sales are taking 1.7%.
3.       Price deflation (lower prices particularly on electrical goods) is taking 1.3%.
Australians spent $40.5 billion on outbound travel in the 12 months to September 2011 leading some commentators to suggest that the real culprit for the retail downturn is Australians travelling overseas. Finding someone to blame doesn’t really help anyone. We need the solution(s) and we are still looking.