Despite NAB reporting that business conditions and confidence diminished slightly in December, the fourth edition of the AFGC CHEP retail index forecasts that there will be a subdued growth for the retail sector in the March quarter, which is traditionally one of the slowest trading periods of the year.

The Index said retail trade in December increased by a better than expect 3.1 per cent year-on-year.

Chief executive Kate Carnell said during this subdued retail environment, Australian retailers and suppliers are focusing on improving operational execution in the supply chain by removing inefficiencies and delays.

“Management of the supply chain has become particularly important in light of recent operational and sales trends such as an increase in the percentage of sales on promotion and value conscious customers creating downward pressure on prices generally. With manufacturing and farming input costs increasing, margins have decreased putting pressure on inventory holdings,” she said.

“Nevertheless, retailers and suppliers are working together to achieve mutually beneficial outcomes through understanding the pressure points and putting in place alternative arrangements that reduce costs and ensure product supply.

“By optimising the efficiency of the entire supply chain, through improved processes and practices, retailers, manufacturers and consumers all win.”
President of CHEP Australia & New Zealand Phillip Austin said while the AFGC CHEP Retail Index results projected continued year on year growth in the quarter ending March, retail trade was not out of the woods yet.

“The analytics used to generate the AFGC CHEP Retail Index are based on supply chain activity. The devastating and tragic floods in Queensland in January last year resulted in ‘one off’ changes in supply chain activity that will impact year on year comparisons during the early months of 2012,” he said.

The AFGC CHEP Retail Index is generated by Deloitte using CHEP Australia transactional data based on pallet movements. The methodology has been tested by Deloitte over the past two years and is a lead indicator of ABS Retail Trade data.