e exception of electrical goods. Preliminary data being provided by those in retail sector suggests that for some shopping centres foot traffic in January is down over 10 per cent on this time last year. This is a significant drop that will be concerning most retailers, large and small along with shopping centre owners. Major Australian retailers are privately, and not so privately, reporting a very flat summer with January being significantly lower than last the same time last year. Therefore, perhaps unsurprisingly we hear Marcs and David Lawrence have called in the administrators with insolvency practitioners reporting significant enquirers from retailers about their services. Over the December/January period we’ve lost Payless Shoes, Howards Storage and Pumpkin Patch. When you look at retail trade figures from the period, it becomes pretty clear that slow sales and decreased revenue forecasts have pushed these retailers over the edge. The usual source of blame for an Australian retail slump is strong competition from international retailers, instore and online. In part, that’s certainly true – it’s becoming increasingly difficult for Australian brands like Marcs and David Lawrence to compete with newer international entrants like Zara and H&M, which offer greater variety and more competitive pricing as a result of global economies of scale. The shift to online retail has likely also hurt Australian retail fashion brands, broadening choice and accessibility of products and increasing competition for the same consumer dollar. More retailers are competing over the same consumer dollar pie, but the pie isn’t getting any bigger. But to properly understand what’s going on with Australian retail we need to look a little broader than international competition. Other local and international factors have combined to result in a perfect storm of bad retail trading conditions. Retailers started discounting earlier than usual to combat overseas online events Christmas was intensely competitive, with shoppers confronted by sales of increasing magnitude at every opportunity, and with discounting starting even earlier than usual to compete with US Black Friday sales in November. January figures, in retail as in life, will show a hangover from Christmas with shoppers having reached peak sales fatigue. December’s unusual weather probably didn’t help matters either. Looking at broader economic conditions, this has been a long time coming. The Australian dollar has devalued 25 per cent in the past three years but prices broadly have not increased, so the consumer has been winning. Ultimately retailers can’t sustain this sort of margin pressure, and having tightened up all possible cost areas. Those retailers not increasing their volume of sales have started to hit the wall. Globally, just about every market is looking pretty volatile. Uncertainty over the short, medium and long-term impacts of major upheavals like Brexit and Donald Trump’s ascension to the US presidency are impacting investor and consumer confidence. That volatility and uncertainty has only increased over the December/January period, especially in the lead up to and following Trump’s inauguration. Australian consumer confidence dropped to an eight-month low in December; we can reasonably assume this has had a bit to do with the month’s low retail sales. In addition to global uncertainty, concerns over unemployment, mortgage interest rates and domestic politics are likely contributory factors. But until global volatility settles down it’s unlikely that we’ll see consumer confidence pick up and retail will suffer as a consequence. Australian retailer’s woes aren’t unique in that respect; low economic confidence as a result of high volatility is impacting everyone, and predicting sector growth at this stage is a pretty difficult ask. With that caveat in place, we do think that retail sales will rebound at some point – the question is how many Australian retailers will the current turmoil claim along the way. If December and January are anything to go by, we could be looking at more closures yet. Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.