Retail Struggles As Online Alters Game, Warns CBA
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Retail sales the biggest business casualty in April, sliding 1.4 percent with sellers facing an uphill battle


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The drop was the biggest fall of all industry sectors, according to the latest Business Sales Indicator (BSI) from Commonwealth Bank.

The retail weakness also acted as a drag on April’s overall sales, which excluding the drop, recorded a 0.3 per cent gain in April. Car sales were also down 0.4 per cent.

 “The retail sector is clearly struggling,” said Commonwealth’s Matt Comyn who also blamed online e-tailing as altering the game rules and traditional bricks and mortar business model.

 And it’s an “uphill battle” he admitted with cautious consumer spending not helping matters. Whilst the difficulty being faced by the sector is nothing new, the industry is facing a growing set of challenges, Comyn warned.

“Online retailing is becoming increasingly prevalent, affecting the traditional retailing model.

This is being compounded by the effects of a strong Australian dollar and consumers who are still unwilling to spend.”

Overall performance is a long way off figures from two years ago, Craig James, Chief Economist of CommSec agreed.
“Conservatism is still clearly the word of choice when it comes to the Australian consumer.”

 

And even economists are uncertain about future growth. “We don’t yet know what the full impact of this will be on their overall level of confidence,” he admitted despite being saved further hardship by the Federal budget just announced.

“With the prospect of two additional rate rises over the remainder of 2011, it wouldn’t be surprising if sales continued to trudge along at this pace for some time to come.”

This wont please the heads of retail houses Myer and David Jones, who both came out last week warning any rates hike would have a further negative impact on trading, agreeing trading was “challenging.”

However, there was some good news emerging from today’s stats.

The strongest lift in spending in the entertainment sector including cinema and video stores.Utility sales also rose. 

NSW recorded the weakest sales (-2.1 per cent), followed by Queensland (-1.1 per cent).

“The latest results show a significant deterioration in spending in NSW in the past four months” the CBA warned.

The BSI tracks the value of credit and debit card sales processed through the bank’s point-of-sale terminals, which accounts for around 40% of total market.

 

The strongest performance was recorded in the ACT (+0.5 per cent), followed by Northern Territory (+ 0.2 per cent) and Tasmania (+0.1 per cent).