Rising optimism among bricks-and-mortar retail

According to Commbank report.

Confidence in the Australian retail industry has rebounded to fresh highs, driven by a sharp rise in optimism among bricks and mortar only retailers, according to the latest Commbank Retail Insights Report.

The research shows that retailers have become more optimistic over the past six months, with 41% of those surveyed predicting an improvement in business conditions in the year ahead – the highest proportion since the survey began in August 2015.

In line with a more positive outlook for business conditions, the vast majority of retailers (76%) are also forecasting stronger revenue over the next 12 months, with 43% anticipating growth of 6% or more. Of these, 18% are aiming for growth of more than 10%.

The steady growth in online sales is also expected to continue, with retailers predicting an almost 20% increase in the year ahead to represent around a third of all sales by volume (31%). This includes an uptick in purchases via mobile devices, which is predicted to grow by a further 20% in the coming year.

In spite of this, retailers operating only physical stores have reported the greatest increase in confidence, with 34% now adopting a positive outlook on future conditions – double the number with a positive outlook six months ago.

The research suggests that this renewed optimism is underpinned by a spike in foot traffic, with almost one in two bricks and mortar only retailers (47%) reporting more customers visiting their stores, up from 36% in July 2017.

Commonwealth Bank national retail manager, Jerry Macey said, “It’s encouraging to see retailers’ view on future conditions surpassing previous highs seen in our first analysis of the sector in 2015. This confidence appears to be underpinned by a healthy revenue outlook for most retail businesses and continued growth in online sales.”

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