Deloitte Access Economics expects the retail sector will end 2013 in better shape than it was during the middle of the year.
“But it still may be Christmas 2014 that brings a smile to retailers’ faces, rather than this year,” Deloitte partner David Rumbens says in the group’s latest Retail Forecasts report, released on Wednesday.
The report forecasts real or inflation adjusted retail sales of 2.2 per cent for the 2013 calendar year before rising to 2.7 per cent in 2014 and 3.3 per cent in 2015.
Rumbens says retailing, like the economy as a whole, has been patchy in 2013 in the face of a difficult transition from resources investment to broader-based growth, which has resulted in weak employment growth.
However, fundamentals have improved with low interest rates, a relatively lower dollar and a post-federal election bounce in consumer confidence.
House prices have risen strongly, although the benefits of lower rates and the dollar will take some time to work through to additional housing activity.
Australian Bureau of Statistics data on Tuesday showed retail spending rose by a seasonally adjusted 0.5 per cent to $22.3 billion in October, building on the 0.9 per cent growth in the previous month.
The Deloitte report showed retailing in NSW had performed better than the national average due to spillover to more spending from surging house prices.
Rumbens said that while the slowdown in resources project construction over the next few years would hurt, the mining states, Western Australia and Queensland, should still see the strongest average retail growth over time, supported by better rates of population growth.
Australian retailers have also improved their online presence in 2013 and, combined with the lower exchange rate, that leaves them in a better position to compete in this fast growth segment.
“There is some confidence in the retail sector this Christmas, but it is more the confidence of surviving through it, rather than walking away with a bonanza,” he said.