Fuel prices, cost of living pressures mounting for retailers

A new survey published by the Australian Retail Council has found that increasing fuel and supply chain costs have significantly increased pressure on local retailers.

ARC's Pulse Survey results found that 58 per cent of participating businesses say current conditions may lead to staff reductions. None of the businesses surveyed said they planned to increase staffing under the current cost-of-living pressures.

More than half of retailers reported absorbing at least some cost increases, while one in four said most or all costs will be passed on to customers. ARC CEO Chris Rodwell said the data reflects a tough period ahead for businesses and highlights the significance of the cost crisis affecting Australia’s retail community.

“Retailers are being hit hard by the sharp increase in costs at the same time as consumer confidence is at a record low,” Rodwell said.

"Retailers are being hit hard by the sharp increase in costs at the same time as consumer confidence is at a record low."
Chris Rodwell, Australian Retail Council

“The fact that businesses plan to adjust staffing levels and are warning about viability if conditions persist, shows the scale of the challenge ahead for a sector that represents just under one-fifth of the economy.”

Furthermore, 82 per cent of participants said a prolonged disruption, such as elevated fuel prices, would cause a serious impact on profitability. The survey also revealed that the outlook for retail is increasingly negative, with 96 per cent expecting conditions to worsen over the coming year.

Rodwell suggested that a temporary reduction in diesel fuel excise is an immediate, practical step the Federal Government can take to ease pressure across supply chains.

“These options will help alleviate challenges faced by retailers and the broader economy and represent a much better alternative to other measures being considered that would only exacerbate the problem,” he continued.

“Retailers are especially concerned with the prospect of widespread, state-based work from home mandates as they would significantly disrupt how Australians shop and make it much more difficult for many retailers, especially small and medium-sized businesses, to survive.”

Retail employs around 1.4 million Australians, and the report noted that rising costs will continue to lead to higher prices, job losses, and business closures.