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Retail profits plummet as shoppers stop spending - Inaugural ARA Australian Retailers' Index released today

New research released today in the inaugural Australian Retailers Association (ARA) Australian Retailers' Index revealed a net balance of 15 percent of the sector reporting a decrease in profitability over the last quarter.

ARA Executive Director Richard Evans launched the quarterly Index today at the Retail World Management & Technology Exhibition in Sydney and said the profitability figures were in line with lower sales performance.

"The ARA Australian Retailers' Index showed sales results for the sector had fallen 21 points since February, indicating a net balance of 10 percent of retailers experiencing a decrease in sales over the past quarter," Evans said.

Evans said retailers were still experiencing a decrease in profitability despite the report indicating 35 percent of retailers increased their prices in the last quarter.

"Retailers need to remain competitive in this environment of economic uncertainty. There may be an increase in prices but they can't apply their normal mark-up to maintain margins because consumers simply won't pay. This is having a negative impact on their gross profit and explains why winter sales have started earlier than usual," Evans said.

Evans said the ARA Australian Retailers' Index didn't indicate a brighter future and warned optimism in the sector may be a little ahead of reality.

"Looking ahead, a net two per cent of retailers were expecting to increase their profitability. However, based on the actual experienced profitability in the last quarter, these expectations may cause further disappointment when the August ARA Australian Retailers' Index is released," Evans said.

The Australian Retailers' Index analyses the Sensis® Business Index results for businesses in the retail sector, providing a snap shot of the retail sector every quarter in the following categories: Retailer confidence; retailer concerns; sales, profitability and employment; capital expenditure; wages and prices and assessment of Federal Government policies. The results of the ARA Australian Retailers' Index assist the ARA to maintain strong links with government and influence and direct policy that may affect the retail industry.

For over 104 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia's $292 billion retail sector which employs over 1.2 million people. As an incorporated employer body under the Workplace Relations Act and with a range of member services including business consulting, policy development, advocacy and education, the ARA promotes and protects over 5000 independent and national retailers throughout Australia. Visit www.retail.org.au or call 1300 368 041.

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