Retailers warn of uneven playing field as RBA holds rates

The Reserve Bank of Australia (RBA) has kept the cash rate on hold at 3.85 per cent, prompting backlash from retail leaders who say local businesses are being undercut by global e-commerce giants like Temu and SHEIN.

“Global competition is well and truly on our doorstep with ultra-low-cost digital retailers like Temu and Shein scooping up a growing share of local spending, without being held accountable to the same standards as our local retailers,” said Chris Rodwell, CEO of the Australian Retailers Association (ARA).

The RBA said it was holding steady to assess whether inflation is continuing to track toward its target.

“With the cash rate 50 basis points lower than five months ago and wider economic conditions evolving broadly as expected, the Board judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis,” said the RBA.

Rodwell, however, called the decision a “missed opportunity” to support an industry grappling with weak spending and mounting costs.

“Weak consumer spending and high business costs continue to put pressure on retailers,” said Rodwell.

“With inflation well within target range, today’s RBA decision is a missed opportunity to bolster the outlook of operators around the country. Retail conditions remain subdued by historical standards and relief is sorely needed.”

He pointed to rising expenses in rents, wages, energy, insurance, and supply chains, as well as increasing retail crime and ongoing regulatory reforms.

“Retailers are among the most resilient and adaptable sectors in the country – but they’ve also copped more than their share of challenges in recent years,” said Rodwell.

“On top of these challenges, businesses are tied up in regulatory reform, navigating the biggest set of workplace changes in decades. Many small businesses simply don’t have the resources to cope.”

Paul Hinds, Managing Director APAC at Circana, said the market remains volatile, with a widening divide between consumers based on financial stability.

“With continued global economic uncertainty and weak discretionary spending, there is a growing divergence between consumers who are financially insulated and those who are increasingly price sensitive,” said Hinds.

While overall spending has stayed flat, volume growth has stalled, he noted.

“For retailers, the road ahead is complex with contradictory and opposing realities requiring them to expand and cut simultaneously to meet changing shopper needs,” said Hinds.

“However, there are signs of a turning point over the next six months so if brands can continue to stretch to meet consumer needs with innovative and high value products we will see industry growth.”