2023 has been a poor year for Australia’s retailers after the heady stimulus-induced years of 2021 and 2022.
Annual retail sales grew by only 1.2% in the year to October, well below the circa 5% growth in CPI inflation and the 2.5% growth in population:
Retail sales volumes fell by 1.2% in aggregate terms, and by 4.5% in per capita terms, in the year to September:
Source: Alex Joiner
Retailers in the discretionary space have been most badly impacted as consumers have cut back on spending in the face of rising mortgage and rent payments, and general cost-of-living:
Therefore, if it wasn’t for Australia’s record population growth, then the retail sector would be stuck in a very deep recession:
Deloitte Access Economics’ latest issue of Retail Forecasts tips the retail sector to record a modest rebound in 2024.
“Consumer spending is expected to rise, thanks to real wage growth, strong population growth, as well an expected turn in the interest rate cycle”, notes Deloitte.
“As a result, we expect real retail sales growth to rise steadily through the upcoming year: lifting from -0.9% in calendar year 2023 to 1.4% in 2024, and then on to 2.2% growth in 2025”.
Given Australia’s population will likely grow by around 2.0% next calendar year (from around 2.5% currently), this suggests that retail sales will fall slightly in real per capita terms.
No wonder retail moguls like Gerry Harvey love mass immigration so much. Because without endless strong population growth, the retail sector would be in the toilet.
