Retailers face deteriorating outlook and mounting costs

Ballooning wages bills, higher energy prices and skyrocketing insurance premiums are adding to the burdens of the nation’s retailers.

Many of the nation’s retailers remain pessimistic about the year ahead given the burdens of higher wage bills, energy costs and rising insurance premiums and are looking for the upcoming federal budget to provide some relief, potentially though energy rebates and addressing the sharp rise in insurance costs.

The National Retail Association has called on the Albanese government, and Treasurer Jim Chalmers to take these excess pressures off businesses to help withstand what is tipped to be souring consumer confidence in the face of sustained cost-of-living pressures.

A pre-budget survey conducted by the NRA and released as part of its 2024 Retail Sentiment Report, has shown deep concerns among business owners about trading conditions, sales growth, and profitability.

Among the key findings of the survey were that 42 per cent of all respondents expected business performance to be worse than last year. Only 23 per cent are expecting sales to be better in 2024, while 44 per cent expect things to be worse, including 8 per cent who expect trading conditions to be significantly worse.

Of those surveyed just over half, 55 per cent, expect a decline in year-on-year profits in the coming 12 months, while 15 per cent expect profits to grow.

And it is the cost of doing business that underpinned these results with 77 per cent projecting overheads to worsen.

“While everyone is rightly focused on the cost of living, high interest rates and low consumer confidence have pushed retailers into a cost-of-trading crisis, putting Australia’s second-largest employer at risk,” said NRA director Rob Godwin.

“The May budget gives the federal government the opportunity to address skyrocketing energy and insurance premiums and take excess pressure off Australian businesses, the lifeblood of our economy.

“Unless these cost-of- trading issues are addressed ­urgently, the government can’t possibly hope to make any inroads on the cost of living.”

Mr Godwin said his retail members were squeezed by a deteriorating sales and profit outlook as well as rising costs. “Insurance premiums are rising exponentially,” he said. “While the government can’t change interest rates, they can step up for businesses in next month’s budget with policy measures to control energy and insurance costs for business and stimulating consumer confidence.”

Mr Godwin argued the government’s advocacy for a higher-than-normal increase in the minimum wage would increase the pain on small businesses, which would invariably be passed on to consumers.