Less discounting with upward trend heading into 2024.

 

Australia’s retail sector is on the up after a “recessionary hit” in 2023, according to the latest retail report by Deloitte Access Economics.

 

While cost of living remains  a concern for consumers, the research firm is forecasting conditions will improve in 2024 with more retailers likely to pull back on discounting in order to drive sales.

 

After three consecutive quarters of falling retail sales, the September quarter delivered the first positive trend in real retail turnover since late 2022.

 

The 0.2 per cent increase on sales volumes in the June quarter was aided by strong discounting, particularly among non-food categories which have been hit hardest by a drop in discretionary spending.

 

“However, retailers are still experiencing the effects of a significant sales deficit over the past year, with overall sales volumes having fallen 1.7 per cent compared to a year ago, despite rapid population growth,” David Rumbens, Deloitte Access Economics partner, said. 

 

“The good news is that we can expect the business cycle to start to improve in 2024, which could mean a move away from this reliance on discounting to achieve sales growth,” he said.

 

“We can expect to see a moderation of inflation in 2024 that will see a return of real wage growth, which was observed in the September data, following three long years of real wage decline.

 

“Positive real wage growth will make consumers less hesitant towards discretionary spending – a welcome change from the tight spending environment retailers have faced in 2023,” Rumbens added.

 

Meantime, a study conducted by Sapio Research found that Australians spent more with online retailers during this year’s Black Friday/Cyber Monday weekend than in 2022.