Retail trade growth to slow in December quarter

Posted by AFN Staff Writers on 10th November 2014
Retail trade growth to slow in December quarter
Retail trade growth to slow in December quarter

Growth in retail trade is expected to soften in the lead up to Christmas, according to the AFGC CHEP Retail Index, which predicts year-on-year growth of 4.8 per cent in the September quarter, slowing to 3.2 per cent growth for the December quarter.

While the Index predicts growth will slow, retail trade turnover is still expected to increase modestly from $23.26 billion in September 2014 to $23.35 billion in November 2014.

The AFGC CHEP Retail Index has shown strong year-on-year growth in 2014 to date, peaking in January at 5.7 per cent and easing in more recent months.

“It is encouraging to see the Index anticipating continuing year-on-year growth for the important December quarter,” said Phillip Austin, CHEP Asia-Pacific President. “With a range of factors driving variability in this seasonal quarter, CHEP is actively collaborating with manufacturers and retailers to deliver certainty to their supply chains as they look to maximise on-shelf availability,” he said.

Food and household goods sales growth

Australian Bureau of Statistics (ABS) figures show the food and household goods sectors have recorded year-on-year sales growth of 5.5 per cent to August 2014.

By contrast, this year’s warmer than usual winter has been blamed for weak clothing sales, as reflected in ABS data, which has indicated no growth in clothing retail over the past year.

“Looking ahead to Christmas, the AFGC CHEP Retail Index indicates the trading year will finish weaker than it began, although traditionally the food and grocery sector is more buoyant at Christmas than other sectors,” said Gary Dawson, AFGC CEO.

Consumer sentiment and rising unemployment impact

Mr Dawson said that although interest rates have remained low, consumer sentiment has not recovered significantly since the May Federal Budget.

“Rising unemployment is also having a dampening effect on retail trade growth and a lift in the labour market is needed to underpin a stronger rate of income growth and therefore retail spending,” Mr Dawson said.

The AFGC CHEP Retail Index is a collaborative project between the AFGC and CHEP Australia, powered by Deloitte. It uses CHEP transactional data based on pallet movements and is a lead indicator of ABS Retail Trade data.

The Australian Food and Grocery Council (AFGC) is Australia’s peak national industry association, representing the $110 billion food, beverage and grocery manufacturing industry. CHEP is a global leader in managed, returnable and reusable packaging solutions, serving many of the world’s largest companies in sectors such as consumer goods, fresh produce, beverage and automotive. Its customer portfolio includes global companies and brands such as Procter & Gamble, Sysco, Kellogg’s, Kraft, Nestlé, Ford and GM. CHEP is part of Brambles Limited. As one of Australia’s leading professional services firms. Deloitte Touche Tohmatsu and its affiliates provide audit, tax, consulting, and financial advisory services through approximately 5,000 people across the country.

The next AFGC CHEP Retail Index will be released in late January 2015.