Retail Industry in Australia
Industry Report
Retail Industry in Australia
Consumer Goods Retailing in Australia: Revenues are forecast to grow marginally over the next five years by 1.4%, as consumer goods retailers will continue to face strong competition from pure-play online stores that stock similar items at low prices.
Department Stores in Australia: Revenues are forecast to decline over the next five years by 2.1%, as department store retailers will continue to face strong competition from online stores and the expansion of international retailers.
CONSUMER GOODS RETAIL Overview
Subdivision revenue is forecast to grow 1.4% over the next five years to $161.2B. Increasing disposable incomes and improvement in the retail trading landscape are projected to support greater demand over the next two years as the economy recovers from COVID-19. Continued advances in technology will also drive demand for a range of technology-based goods. However, big-box retailers, international retail chains and department stores are anticipated to increase competition for specialised retailers.
While this trend is forecast to encourage greater demand from bargain hunters, increasing price-based competition will put pressure on profit margins. The popularity of online shopping is forecast to continue increasing, negatively affecting traditional retailers. The number of subdivision establishments per enterprise is anticipated to rise, as smaller players exit the industry and major players expand strong brands. Industry employment numbers are projected to rise, with firms anticipated to offer improved customer service to better compete with online stores.
Online shopping and auction websites will continue to influence sales across individual product categories. Although price competitiveness is important, choice and convenience are also projected to drive consumers to shop online. In addition, the popularity of smartphones is expected to fuel demand for mobile ecommerce. Growth in the number of consumers opting to use mobile devices for transactions and payments is anticipated to boost online sales. Consumer demand for cosmetics and toiletries, computers and software, and pharmacy goods is projected to grow. Consumer electronics will likely benefit from new products entering the market as a result of constant technological advances.
Cosmetic and toiletry retailers benefit from consumers' ability to inspect and test products in-store, making them better able to compete against online-only retailers. Pharmacies are also projected to perform well. Giant one-stop shops will likely cater to diverse range of consumers, and niche operators will focus on servicing smaller markets. Businesses are anticipated to roll out new formats and concept stores over the period. Operators will focus on lowering the cost of doing business, driven by productivity improvements; enhanced technologies; improved distribution strategies; and more efficient product sourcing. In addition, wage costs are forecast to decline as firms increasingly employ part-time and casual workers.
Department Store RETAIL Overview
Due to rising competition, industry revenue is forecast to decline 2.1% over the five years through 2024-25, to $16.2B. intensifying competition from specialist retailers, online stores and international retailers is projected to constrain revenue growth. Aggressive store expansion strategies of major international clothing labels is also anticipated to present increasing competition.
Existing players are forecast to continue re-evaluating their store footprint and close underperforming stores. This decision will allow players to better reinforce their brand image and grow market share. High competition is anticipated to continue forcing operators to lower prices to attract customers. However, a strong focus on refining supply-chain efficiencies and inventory management is forecast to minimise profit declines.
Department stores are predicted to bypass wholesalers and source products directly from manufacturers in countries with lower manufacturing costs, allowing operators to streamline supply-chain processes and eliminate intermediary costs.
Retailers are forecast to continue investing in staff to differentiate themselves from online competitors, as companies focus on enhancing their customer experience, and making the stores an interactive and unique environment. This is anticipated to place upward pressure on average wages, however, the number of employees per store is forecast to decline, as technological developments reduce the industry's reliance on staff to complete manual tasks.
The increasing popularity of online shopping, especially on overseas websites, is forecast to intensify the competitive pressures. Ongoing cautious consumerism, which is driving the preference for online bargain hunting, is projected to support demand for the goods that foreign retailers sell.
The rapid store expansion of several international players is forecast to significantly change the clothing retail market. Industry operators are projected to face fierce competition from these companies as they have access to significantly larger supply chains that can give them higher quality brand positioning and allow them to offer lower prices.
