New research released in the March ARA Australian Retailers Index revealed confidence among small to medium retailers fell 16 points to 24 per cent, resulting in the lowest level of confidence and the largest fall recorded for any industry sector in the past quarter.
ARA executive director Russell Zimmerman said fall in confidence over December, January and February coupled with concerns retailers have about the economic climate and consumer spend are an indication retailers are still struggling to recover from the downturn.
"The results of the March ARA Australian Retailers Index indicate there is a long way to go before retailers fully recover to 'business as usual' after the GFC,” he said.
“Right now small to medium retailers are telling us they're suffering more than SMEs in any other industry.”
Major concerns for the sector include lack of sales (13 per cent) and cash flow (13 per cent), said Zimmerman. However, the most common concern for Australian retailers this quarter was the economic climate, including people not spending, which was reported as a problem by 16 per cent of retail SMEs.
"Retailers are more concerned about the economic climate than SMEs in other sectors, where only nine per cent reported the economic climate was currently causing problems for their business,” he said.
"The level of concern retailers still have about economic conditions is driven by disappointing sales and profitability. After an eight point drop in sales in the December quarter, retail sales performance has improved slightly in the past quarter, up two percentage points to a balance of negative 11 per cent. This was the lowest sales result for any sector.
"In line with the small improvement in sales performance, retailers reported a five point increase in profitability performance resulting in a balance of negative 17 per cent. This means there are still more retailers (40 per cent) experiencing declines in profitability than increases (23 per cent) and looking ahead, the profitability expectations of retail SMEs were the lowest of any industry sector,” concluded Zimmerman.