Deloitte Access Economics’ quarterly retail forecasts released yesterday has predicted inflation-adjusted retail sales to rise by 2.4% in 2015-16 and 2.3% in fiscal 2017, compared with 3.3% in fiscal 2015 and 3.1% in 2014. This comes despite the best Christmas sales period since the global financial crisis.
Deloitte has warned retailers to prepare for at least two years of subdued sales growth as declining per capita incomes, softening house prices and weak commodity prices coincide with increased competition from global players.
Deloitte Partner David Rumbens said retail sales had performed well in 2015, but there were signs that demand was starting to taper off, pointing to weaker than expected retail sales growth in the months of December and January.
“We expect to see more of that in the next few months,” Rumbens said yesterday.
“The improved performance over the past year has been more driven by lower interest rates, rising house prices and a willingness to run down the rate of savings, which is a temporary rather than a sustained boost.
“If we get less of a boost from those channels then underlying income growth is relatively modest.”
While employment growth and consumer confidence had been holding up reasonably well, housing valuations were looking stretched and concerns about job security were growing.
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This story first appeared in Consumer and Impulse Retailing.