Australian retailers are urging the Federal Government accelerate regulatory reform and to provide further cost relief and as the supply chain impacts of the Middle East conflict intensify.
The Australian Retail Council’s (ARC) latest survey of retailers reveals supply chain conditions have worsened over the past month for three in four businesses, with cost pressures intensifying across freight, logistics and energy.
Concerns about the outlook are mounting, with historically weak consumer confidence and continued inflationary pressures. Two in three retailers surveyed report a high or severe level of concern about trading conditions over the next three months, while around half expect disruption to persist for at least six months.
Shipping and freight costs remain a major pressure point, with around three in five retailers reporting increases of more than 10 per cent. These sustained cost increases are placing significant strain on viability across the sector.
ARC CEO Chris Rodwell said retailers continue to prioritise customers in the face of these challenges.
“Three in four businesses report they are absorbing cost increases either fully or partially. However, this approach has become unsustainable for many. Around two in five retailers now expect they will need to increase prices by approximately five per cent within the next three months to offset rising costs, with some anticipating larger increases if current conditions persist,” he said.
“Costs are rising, margins are tightening, and retailers are being forced into difficult decisions. Retailers are doing everything they can to shield customers, but unless we see improvements or the supply chain disruption will unfortunately be felt by customers at the checkout.”
Retailers have welcomed recent Government measures to secure fuel supply, noting that fuel excise reductions and changes to the heavy vehicle user charge are providing meaningful, if partial, relief.
However, the sector is calling for further targeted and practical support. Priority measures identified by retailers include relief for freight and logistics costs, additional energy cost support, and further action on fuel excise. There is also strong support for greater government effort to strengthen Australia’s fuel and energy security.
Retailers emphasised that reducing administrative and regulatory burden—particularly inconsistencies across state borders—would deliver immediate benefits. Improved national coordination to reduce freight bottlenecks has also been identified as a critical reform to support the sector both during the current crisis and into the future.
“There has never been a better time than now to lock in reform to reduce inconsistent rules and regulations across Australian states, especially to support logistics at a time when supply chains are already under pressure,” said Mr Rodwell.
Governments can further assist smaller retailers by providing cash flow relief measures, including the deferral of taxes, to help businesses manage through this period of heightened uncertainty. Already in this financial year retail trade insolvencies are three times the level recorded across the whole of the 2021-22 financial year.
Retailers have also issued a warning against measures that would limit trading activity, such as work-from-home mandates. Nine in ten businesses say such restrictions would negatively impact the sector by reducing foot traffic, lowering sales and weakening demand.
As governments consider further interventions, the Australian Retail Council is urging policymakers to recognise retail as a critical component of Australia’s economic and social infrastructure – employing one in ten Australians and comprising almost one fifth of GDP.
“Policymakers must recognise the critical nature of the retail industry’s $444 billion contribution to the Australian economy. No matter what lies ahead in this crisis, retail must remain open and operating to ensure households can continue to access essential goods, maintain local employment and support economic stability,” said Mr Rodwell.
The ARC online survey was conducted between 21 and 24 April, with 160 national businesses participating. Small retailers made up more than 66 per cent of respondents.