Pharmacies have experienced modest sales growth over the past five years. Demand for prescription pharmaceuticals and an expansion in product range via the introduction of new, more expensive medicines have driven sales over the period.
Although consumers continue to purchase newspaper, book and stationery goods for a range of private uses, sales have grown marginally over the past five years. The low growth is associated with the growing popularity of the internet, which has altered the way consumers read newspapers. In addition, external players have increasingly sought to attain a larger share of the book market.
The remaining products in the consumer goods retail sector have posted mixed results over the past five years. At the top end of the market, toy and game retailers have experienced solid growth, with demand driven by the popularity of electronic and interactive toys and computer and video games. Antique and used good retailers have also performed well, with sales expected to rise in the five years through 2011-12. Despite being boosted by growth in incomes and the increasing popularity of used and antique merchandise, sales have come under increasing pressure from auction websites. Sales by recorded music retailers have contracted largely due to increasing competition from department stores, music piracy and the rising popularity of digital downloads.
Other (76.5%), Wesfarmers Ltd (13%), Woolworths Ltd (4.5%), Harvey Norman Holdings Ltd (2.5%), Myer Holdings Ltd (2%), David Jones Ltd (1.5%)
From clothing to computers, the consumer goods retail sector will post steady growth over the five years through 2016-17. Demand will be boosted by growth in disposable incomes and an overall improvement in the trading landscape for retailers. In addition, continued advances in technology (albeit at a slower pace than in the past five years) will drive demand for a range of technology-based goods. However, the market will not be without its pitfalls, as department stores and other category killers are expected to continue to affect competition in specialist areas. The consumer goods market will also be affected by growth in the number of consumers choosing online shopping options over a visit to traditional brick-and-mortar stores.
Forecast growth in disposable income of 4.2% per annum will be the backbone of the recovery of the consumer goods market over the next five years. Incomes will follow an upward trajectory over this period, supported by solid economic growth. Disposable incomes will also be boosted by rising wages. The retirement of baby boomers and resulting demand for new skilled workers will place upward pressure on wages, which is expected to extend to at least 2025. Annual trends in interest rates will continue to affect incomes by influencing the level of debt repayments required by consumers. Growth in disposable incomes will aid demand for higher priced merchandise and broaden the range of goods available to consumers on limited budgets.
Overall demand for consumer goods will, however, be affected by fluctuations in the consumer sentiment index. Consumer sentiment is forecast to increase in the two years through 2013-14 before trending downwards. Annual fluctuations in consumer sentiment over the coming five-year period will be largely affected by the anticipation of interest rate rises and the resulting effect on disposable incomes. Steady economic growth is also expected to influence consumer sentiment over the period.
An expected upward trend in the national unemployment rate from 5.0% in 2011-12 to 6.2% in 2016-17 will have a notable effect on demand for consumer goods over the next five years. The rise will be due to growth in the retirement rate, with consumers leaving the workforce and reducing the participation rate across Australia. The rise in unemployment will spell trouble for retailers as more consumers will be living on reduced incomes.
Demand for consumer goods will be aided by a rise in household formation of about 1.8% per annum. Solid growth in the economy and a housing shortage will lead to a rise in housing starts and hence growth in household formation. The effect will be stronger demand for many household items including domestic appliances, furniture and electrical goods.
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