2010 Retail's Slowest Year of the Decade

The retail industry limped home in December to finish the calendar year with the slowest growth of the decade, at just under 2.5%



The subdued growth is in equal measure a result of weak price growth and week volume growth. Both have grown at less than half the average growth rates of the last decade (prices 0.2% in 2010 vs ave 0.4% for the decade, and volume 1.8% vs ave 4%)

December itself, continued the subdued trend of the last quarter with growth of 2.1%, seasonally adjusted

Clearly times are a changing in the retail industry. Retail used to be a key indicator of economic growth, often outpacing CPI 2 to 1, but today it even lags that measure (CPI December quarter 2.7%)

But what do the detailed numbers tell us?



The year was won by cafes and restaurants who enjoyed 10% growth, while newspaper & book retailing managed a resurgence in the second half to finish with 6.3% growth.

Feel good industries, pharmacies (5.6%) and liquor (6.3%), both maintained strong growth

Pick-me-ups, footwear and accessories, ended the year with a solid 4% growth, while simpler home enhancement furniture, floor coverings housewares and softgoods managed to perform above the average at 3.4%

Supermarkets and grocery stores, the bell-weather of retail performance, grew at 2.6% for the year.

On the other side of the ledger we are seeing traditional general merchandise retail struggling

Department stores declined 0.9% in 2010 with soft goods and home improvement specialists following suit.

Hardware (1.7%), household goods (1%) and electrical goods (-0.9) all dragged with the combination of an uncertain property market and a more cautious consumer

And while footwear and accessories managed 4% growth, the apparel industry is clearly facing troubled waters with declines of -3.2% for the year.

So is retail at a crossroads?

Experiences and feel good categories are growing while traditional retail falters

Today's consumer is more savvy, more cautious, more thrifty,, but they are spending more in the categories that add value – experience, solutions and pick-me-ups

As we head into this new decade it is time for all retailers to think harder about engaging consumer needs, and not just the products they sell

If you would like to understand your category in more detail, your relative performance, or how to better engage your consumer, RetailOasis has extensive retail experience and can assist you with future business development based on rigorous quantitative analysis and insights. Contact Steve Kulmar or Nerida Jenkins at RetailOasis on +612 9976 6222.

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