The ABS’ June retail statistics show a slight increase in sales volume but growth has been driven by stronger discounting, according to CBRE analysis of the data. CBRE says this highlights underlying pressure on retailer margins is continuing.
Australian Bureau of Statistics (ABS) retail sales statistics show a 1 percent rise over June, bringing the annual rate of growth to 4 percent.
Stephen McNabb, CBRE Australia head of research, says strong volume growth has been supported by stronger discounting, with overall retail prices down by 0.2 percent through the year to the June quarter.
“These trends are consistent with our view that retail sales have bottomed out, although there isn’t strong impetus in forward indicators of the labour market or sentiment, which remains below average, to suggest a further acceleration.
Further, the extension of discounts suggests that underlying pressure on retailer margins continue,” McNabb says.
Household goods remain under pressure, while food, pharmaceutical and restaurant sales are relatively strong, according to the ABS data.
Annual growth has improved in all states, with the exception of Victoria. Victoria is ‘feeling pains’ from a decline in construction activity and weaker housing sector, according to McNabb.
McNabb says the broader issue for property markets is the adjustment of sales growth from a 6-8 percent range of growth (pre GFC) to a 2-4 percent band.
“The slowing in pricing growth explains much of this movement. That impacts rental growth, has held back valuations and stretched yields, which have already been impacted by rising risk premiums across all risky asset classes,” McNabb says.
“We have seen the latter particularly in the case of sub-regional centres versus prime yield differentials. Clearly there are varied risks across the sector, with more defensive tenancy mixes faring better with higher exposure to non-discretionary spending such as food/staples and pharmaceutical spend, while at the other end of the spectrum, bulky goods centres have been impacted more by lower big ticket item spend and a soft housing market.”