Retailers across Australia say things are getting tougher, with supply chain delays dragging on and costs climbing across the board.

New data from the Australian Retail Council (ARC) shows three in four retailers reckon conditions have worsened in the past month, with freight, logistics and energy all getting more expensive. These higher costs mean tighter margins, which could force retailers to reconsider their prices.

ARC CEO Chris Rodwell says many businesses have been doing their best to shield customers, but that approach is reaching its limit.

“Three in four businesses report they are absorbing cost increases either fully or partially. However, this approach has become unsustainable for many,” he said.

The survey found two in five retailers now expect that they’ll need to lift prices by about five per cent in the next three months just to keep up. Some business owners suggest the increase could be higher if the economy and cost of doing business doesn’t improve.

Freight costs doing the damage

Shipping and freight are a big part of the problem, with around three in five retailers reporting increases of more than 10 per cent. That’s on top of weak consumer confidence and ongoing inflation, which is already making it harder to drive sales.

The ARC reports that two in three retailers say they’re “highly concerned” about trading conditions over the next three months, and about half expect disruptions to drag on for at least six months.

Rodwell says economic conditions are leaving businesses with few good options.

“Costs are rising, margins are tightening, and retailers are being forced into difficult decisions,” he said.
“Retailers are doing everything they can to shield customers, but unless we see improvements… this will unfortunately be felt at the checkout.”

Government help appreciated

Retailers say recent government moves around fuel supply have helped take a bit of pressure off, including fuel excise cuts and changes to heavy vehicle charges. They’re now calling for more targeted support, especially around freight and logistics, energy costs and fuel.

There’s also a push from the ARC to cut red tape, which is especially inconsistent across state borders and adds extra costs.

“There has never been a better time than now to lock in reform to reduce inconsistent rules and regulations across Australian states,” Rodwell said.

The ARC is also calling for practical support to help ease the cash flow crunch.

Small biz hardest hit

Smaller retailers are feeling the pressure most, with the ARC warning that insolvencies are already climbing sharply this financial year.

The group is calling for practical support such as tax deferrals to help businesses manage cash flow during what’s shaping up to be a rough patch. There’s also concern about any policy moves that could reduce foot traffic, including work-from-home mandates. Nine in ten retailers say it would directly hit sales.

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