Retail sector registers strong 2015

By Greg Bell

The Australian retail sector posted strong results last year, even in light of the challenges of a stronger, wider economy, analysis from Deloitte has suggested. The group indicated that some sectors performed better than others, perhaps making them more inclined to go in search of retail leasing on the Gold Coast.

Retail's shining stars

Household goods and clothing retailers reported the best results in 2015, and despite a slow start, department stores also posted decent profits over the course of the year.

The success of these particular industries has been down to rising household wealth – and the improvements in consumer confidence that come with it. Lower oil prices have meant people are now paying less to fill up their car, which has freed up their personal finances to be spent in other areas.

Deloitte also noted some regional differences in the retail sector. The south-east of the country performed relatively strongly – namely Victoria, New South Wales, the ACT, Tasmania and South Australia. Remaining states and territories that make up the "sun-belt", on the other hand, experienced quite different fortunes.

Forecasts for 2016

Official data for retail activity has already been released for the first month of this year, showing a subdued start for the sector. The Australian Bureau of Statistics (ABS) revealed that in both seasonally-adjusted and trend terms, retail turnover increased 0.3 per cent between December and January.

On a year-on-year basis, Australian turnover was up four per cent, with household goods, food and footwear and personal accessory retailing leading the charge.

These results are largely in-line with Deloitte's expectations, as the group indicated that the global economy has seen a rather turbulent start to 2016. This is largely a result of the slowdown in China, which has meant commodity prices have taken a hit.

There's potential for this to have a knock-on effect for Australia's national income growth, not least because the two nations have such strong trade links. Only time will tell whether this has a far-reaching effect on retail leasing on the Gold Coast and other parts of the country.

What the longterm future holds

It's possible that Australian retailers could feel under pressure to reduce their prices further over the coming years, especially given the rising competition from overseas companies. Deloitte explained that global developments mean the international marketplace is becoming increasingly smaller, opening up new markets to companies that might not otherwise have been able to expand.

As a result, a growing number of international firms could be hoping to buy commercial property on the Gold Coast as they have their sights set on the Australian market. It will be interesting to see how the situation progresses over the next few years.

If foreign investors start to retreat in terms of their future capital flows then quite a different situation could emerge. The analysts explained that this could put increased pressure on house prices and therefore the retail landscape, as people have less disposable income to their name.

The retail sector is up against a fair amount of challenges over both the short- and long-term, so it will be a case of waiting to see how operators respond. Retail is so closely linked to other aspects of the national economy that it's perhaps unsurprising just how turbulent activity can be.

Commercial property on the Gold Coast nevertheless remains in hot demand, so if you're interested in retail leasing or some other type of real estate, make sure you get in touch. We're experienced agents with a sound knowledge of the local area, giving you all the expertise you'll ever need to invest in a place of your own.

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