News
Issue No. 20 - December/January 2005
Retail relapse on the cards
South Australia’s healthy retail sector has been enjoying an ‘indian summer’ that may not last much past Christmas, according to the latest BankSA Trends analysis.
Trends sees a decrease in consumer buying power as the greater than normal disposable income consumers have enjoyed since the the turn of the century subsides.
On the other hand, Deloitte research in conjunction with the local Australian Retail Association shows this will be a very good Christmas indeed for retailers, as buying habits show a consumer preference for getting the shopping done early.
Trends reports that rising household incomes since 1990 boosted consumer spending power which helped create a healthy environment for retailers. Nationally, retail spending as a share of household disposable income has increase from a long-term average of around 34% to more than 36% in the past two years.
National retail results have been disappointing in the past three months. Retail expenditure is now expected to ease over the next two to three years as the spending to income ratio reverts back to the long-term average.
"From 1990 to 2001, South Australian retail sales represented just over 25% of the Gross State Product," BankSA’s Managing Director, Rob Chapman says. "Since 2001, this has increased to a share of more than 28%.
"Rising household incomes laid the foundations for the retail boom. Other factors have added to its momentum, including growth in house prices, low interest rates, a decline in savings, high consumer confidence and a healthy business cycle.
"However, while the accumulated wealth of South Australians remains intact, moderating house prices and declining savings of Australian households suggest that the current level of retail spending cannot be sustained."
While Australian household saving has declined steadily since the 1980s in line with international trends -- households now spend more than they earn -- this has b...
