After we closed the book on 2010, the worst year for retail in a decade... January delivers more of the same

1.8% growth year on year in January
That’s right, 1.8%
Worse than December (2.1%)
Nearly a full point below CPI..that’s at 2.7%

So let’s get real and call real retail growth in January less than a percent…0.9% to be exact

And it was the food and liquor behemoths who represent nearly 34% of retail, who held the category up with a resurgent 4.3% growth

Year on Year Growth January 2011 Source: ABS Retail Trade Seasonally adjusted 8501012



The few other bright sparks were the more discretionary, experience based categories including newspaper & books (12.2%), pharmacy & cosmetic (5.4%) and cafes/ restaurants (4.2%)

But for most the story remained the same… negative growth in both real and nominal terms was felt across general merchandise… household goods (-1.9%), clothing and footwear (-3.3%) and the department store are seriously feeling the pain (-4%)

We might have closed book on 2010, but it is worth looking back, so we can start to think about how best to move forward

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

Year on Year Growth December 2010 Source: ABS Retail Trade Seasonally adjusted 8501012



The subdued growth was 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%)

The results of January are a continuation of the trend that was set throughout 2010, where the smaller discretionary, experience based categories prospered and general merchandise faltered

Year on Year Growth December 2010 Source: ABS Retail Trade Seasonally adjusted 8501012



So is retail at a crossroads?

Experiences and feel good categories are growing while traditional retail falters

Clearly consumers are more considered. The two major influences of the uncertainty of the GFC and critical mass of opinion in the sustainability debate have combined into a major change in consumer behaviour

While disposable income has grown, consumers are saving like never before. As a result, retail as a share of household income has declined significantly – from approx. 32% in the mid 00s to 28% by the end of 2010. At the same time, savings have grown from negative equity to 8.7% of disposable household income

Source: ABS Retail Trade Seasonally adjusted 8501012 & National Accounts, December 2010



Today’s consumer is more savvy, more cautious, more thrifty, but they are spending more in the categories that add value – experience and solutions

As we head into this new decade, to be successful retailers must move the focus from cutting costs to thinking harder about engaging changing consumer needs, and adding value.

What are your experiences, what are your solutions?

If it’s broken, now’s the time to break out!

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 or follow the link below to order a report.

Click here to view detailed December results, or here for January.

Click here to order custom report.