Whilst retailers had a a stronger 2014 than previous years, it was still challenging and 2015 seems to continuing along the same path despite a substantial reduction in fuel prices and continuing low interest rates. Many retailers feel that consumer confidence is fragile and the upcoming Federal Budget will need to be carefully crafted to ensure we do not have a repeat of last year when the budget measures impacted on consumer confidence
Those retailers which are continuing to flex to meet the ever changing consumer demands appear to be performing well, however those retailers that have not changed their overall value proposition to meet their customers demands are not trading well in the challenging conditions.
The falling Australian dollar will be both a positive and a negative for retailers and consumer goods organisations. With a weakening dollar, online sales may be slower than in past years when the dollar was strong, however on the negative side, we may well see price increases as organisations’ hedging cover progressively runs out in the next six to twelve months. This may lead to low levels of inflation which is not all that bad. In order to minimise the cost increases from suppliers, organisations will need to drive their sourcing departments hard to optimise margins and also drive down the cost of doing business. This drive toward enhanced sourcing will be vital to success as the influx of global retailers continues to set up in Australia.
Partner, PwC Australia
Tel: +61 2 8266 2903