There’s still time to find a job in retail in Adelaide but beware, the retail sector is preparing for a tough period ahead as rising inflation and weak consumer confidence threaten to send spending plummeting.
Last week market analysts cautioned their clients that the COVID-induced sugar hit has worn off.
Discretionary spending has dropped 10 per cent over the past month and conditions are unlikely to improve anytime soon.
Retailers have warned shoppers and investors about rising costs over the past 12 months. However, this year has brought inflationary pressures sharply into focus, with raw material shortages, fuel price spikes and shipping cost increases, contributing to rising inflation.
Compounding this are further pressures affecting shoppers’ wallets, including rising interest rates and power prices. The reopening of international travel has also prompted more spending in non-retail categories.
Retailer Mark Mezrani, who operates 50-odd Kidstuff stores around the country, agrees that any COVID-related benefits for retailers appear to have worn off, and the outlook is increasingly grim.
“The Australian consumer is starting to get the message that the party’s over,” he said. “The things that were fuelling spending – government support, low interest rates, low energy prices, house prices rising – every one of those indicators have now reversed.”
“Coupled with the current labour shortages, supply disruption, and massive price increases in shipping costs, it doesn’t bode well.”
Already, international retailers have started to report signs of a marked slowdown in consumer spending, with US behemoths Walmart and Target both recently reporting weak earnings and warning of a downbeat environment to come.