Hardware, Building & Garden Supplies

Transcription

1 Hardware, Building & Garden Supplies Industry Insights & Intelligence Report February 2016

2 About the National Retail Association (NRA) The NRA is Australia's largest and most representative retail industry organisation. For almost 100 years, the NRA has represented the interests of the retail, fast food and broader service sector, delivering critical information and advice to thousands of businesses nationally. NRA's services are delivered by a team of highly trained and well qualified people, in-house, with decades of retailspecific knowledge and experience. About the NRA Business & Industry Intelligence Unit The NRA has a dedicated Business and Industry Intelligence Unit that provides insight into the everchanging retail environment, how businesses are adjusting to change, and what they are doing to remain relevant in an increasingly digital marketplace. With extensive experience and expertise across the Australian retail landscape, team members in the Business & Industry Intelligence Unit have the insight and technical support needed to deliver a broad range of advice to retailers, as well as businesses and agencies that service this diverse industry. The team has the knowledge and technical experience to understand and translate the current and future needs of retail businesses, and through deep engagement and evidence-based decision making, can facilitate genuine and reliable collaborations between retailers, service providers and government. About Cameron Meiklejohn, NRA Industry Research & Data Analyst Cameron has been working in the area of market and social research for more than a decade, with experience across the private, government and academic sectors. His experience is diverse, ranging from brand management, media relations, and data analysis. With a constantly evolving role, to meet the needs of members and industry, Cameron is responsible for analysing and interpreting industry, economic and social data, to better understand the retail landscape and its position within the broader economy.

3 Hardware, Building & Garden Supplies Industry Insights & Intelligence February 2016 Prepared by Cameron Meiklejohn Industry Research & Data Analyst National Retail Association This industry insights and intelligence report has been prepared by the National Retail Association to provide businesses, operating within the Hardware, Building and Garden Supplies category, some analysis and commentary around top economic trends. Key insights are as follows: On track for modest growth The National Retail Association estimates that the hardware, building and garden supplies category will grow by 6.9 per cent across 2015/16, generating actual sales of $18.23 billion. While this is below the 9.6 per cent growth figure that was achieved in 2014/15, it is still well above the long run average of 4.7 per cent. Housing Churn & Hardware Analysis conducted by the National Retail Association indicates that the volume of established dwellings being sold, has a sizeable and significant impact on actual retail sales for hardware, building and garden supply businesses. Economic models suggest that each property sale generates approximately $3,145. Strong Christmas Sales Hardware, building and garden supply businesses have benefited from solid consumer spending across the holiday trading period in 2015, generating $2.58 billion nationally. This represents a 6.6 per cent increase in sales compared with 2014, which is an increase of almost $160 million. Industry view: Volatility in financial markets may cause some contraction in consumer spending, despite relative strength in the Australian economy. However, rising job vacancy rates, and house sales, should make the forecast growth of 6.9 per cent an achievable target for this retail category.

4 Solid Growth Forecast for 2015/16 Following a busy holiday trading period for the retail industry in general, it would appear that the Australian economy, and retail in particular, is heading in the right direction as attention turns to the second half of the 2015/16 financial year. Since July 2015, hardware, building and garden supply businesses have benefited from gains in employment and house sales, both of which provided momentum for strong spending, leading into the Christmas period. Further, a lower exchange rate resulted in more people staying in Australia for the summer holidays, increasing spending across many retail categories, including hardware, building and garden supplies. Should these economic conditions continue in the coming months, the National Retail Association estimates growth of 6.9 percent in 2015/16 for the hardware, building and garden supplies category.

5 Actual Retail Sales ($bn) Growth Rate (%) Momentum Leading into Christmas Retail sales were steady through the second quarter of 2015/16, with hardware, building and garden supplies recording a growth rate of 7.3 per cent in December, suggesting a strong spend across the Christmas trading period. Indeed, October, November and December improved on the results of the preceding quarter, with actual retail sales being $5.12 billion, which represents a 6.2 per cent ($300 million) increase on the same quarter last year. Hardware, Building and Garden Supplies Actual Retail Sales ($bn) & Growth Rate (%) 2011/ /16, by Quarter Actual Retail Sales ($bn) Growth Rate (%) % 10.0% % 6.0% 4.0% 2.0% 0.0% 2011/ / / / /16 Year Source: ABS, NRA When adjusted for inflation, the increase in actual retail sales was 4.5 per cent, compared with the same quarter last year. As this suggests, Australians are continuing to spend strongly within the hardware, building and garden supplies category. Specifically, recent increases in the number of established dwellings being sold, has had a significant impact on this sector of retail. Economic models prepared by the National Retail Association indicate that, keeping all other factors constant, for each additional established dwelling that is sold, actual sales for hardware, building and garden supply businesses increase by $3,145. It is argued that this increase in sales, is connected with the renovations, painting, and other improvements that home buyers make when first moving into a property.

6 MAT Change (%) Further, at the time of writing, the MAT Change (%) for hardware, building and garden supplies was of 7.7 per cent % 10.0% Hardware, Building & Garden Supplies Moving Annual Turnover Change (%) 2011/ /16 MAT Change (%) Forecast Long Run Average 8.0% 6.0% 4.0% 2.0% 0.0% Year Source: ABS, NRA While indications suggest that this category is beginning to contract, falling from the peak of 9.9 per cent, which was recorded in November 2014, MAT Change remains well above its long run average of 4.7 per cent. 1 Moving annual turnover (MAT) is the total value of consumer spending for a twelve month period, calculated on a monthly rolling basis.

7 Actual Christmas Sales ($bn) Growth Rate (%) Christmas Sales Analysis conducted by the National Retail Association indicates that hardware, building and garden supply businesses had a successful Christmas trading period with sales increasing by 6.6 per cent on For some businesses, the most recent holiday trading period has been one of the strongest since the global financial crisis, indicating that the momentum generated in the first half of 2015/16 translated into solid sales figures, particularly in December. The National Retail Association estimates that turnover for the holiday trading period, which is usually regarded as the last two weeks of November, and all of December, was approximately $2.58bn, which represents an increase of almost $160 million on the 2014 total. Hardware, Building & Garden Supplies Actual Christmas Sales ($bn) & Growth Rate (%) Actual Retail Sales ($bn) Growth Rate (%) $2.58bn 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Year Source: ABS

8 Actual Retail Sales ($bn) Growth Rate (%) Predictions for 2016 Given the positive results from the first half of 2015/16, and relative strength of the Australian economy, it is reasonable to suggest that consumer spending should be robust for the second half of the financial year. Analysis conducted by the National Retail Association suggests that labour demand should continue to rise, keeping unemployment below 6.0 per cent. These improved conditions within the labour market should maintain current levels of consumer confidence in the short term. If this translate into an increase in the number of established dwellings being bought and sold, improved trading conditions should be created for hardware, building and garden supply businesses. Hardware, Building and Garden Supplies Actual Retail Sales ($bn) & Growth Rate (%) 2011/ /16, Annual Actual Retail Sales ($bn) Growth Rate (%) $18.23bn 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Year Source: ABS, NRA The National Retail Association estimates that turnover for the hardware, building and garden supplies category will reach $18.23 billion for the 2015/16 financial year, representing growth of 6.9 per cent on 2014/15. At this level, the category would remain above the long run average growth rate of 4.8 per cent. In broad terms, the anticipated gains in employment, sustained consumer confidence, and dwelling purchases should maintain the solid growth seen in this category since 2012/13.

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