According to James, this could indicate that larger retailers are continuing to take business from small business, but may also indicate the growing tendency to purchase goods online as the major online businesses are in the large retailer sector.
While the mystery remains as to what impact online sales is having on retailing figures, James says there is “good reason to suspect that retail spending is stronger than the top-level data suggests. In fact, much closer to ‘normal”.
“I think 2013 will be a better year for retailers,” James tells Property Observer.
While there will be further pressure on retailer margins, he says he is “reasonably positively” about 2013 provided there are no major overseas disasters.
Factors in favour of a better year for retailing include low unemployment, improved housing affordability and lower interest rates meaning consumers can be a little more confident, says James.
“Consumers will still continue to look for bargains and compare store prices with what is available online.”
He says service-orientated retailers (cafes, restaurants, travel and entertainment providers) should continue to do well.
ANZ economists Riki Polygenis and Justin Fabo also note the better performance of larger retailers “trending higher in contrast to the broadly flat profile for small retailers’ sales over the past 18 months”
They say that recent weakness in retail sales appears “heavily concentrated among smaller retailers, with sales well down from their peak in June”.
“These retailers tend to have less flexibility to maintain sales via discounting, marketing and other strategies and a higher share of their sales are likely to be discretionary,says Polygenis and Fabo.
This article first appeared on Property Observer.
