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2014 Federal Budget

After the recent release of the Abbott Government’s 2014 Federal Budget there are numerous views and opinions forecasting the impact on the retail sector.  Elizabeth Knight from the Sydney Morning Herald shared an interesting perspective in her article published on May 15 –  ‘Two-edged sword for retailers’.

Knight presents a case where ‘those at the bottom end of the pay scale’ will continue spending all the income they receive.  To make their dollars go further, she suggests they may change the mix of items they buy in the hunt for value – that is, trade down brands.  On the flip side, she forecasts high income earners are unlikely to change their spending.

Undoubtedly we will see shifts in spending.  Retailers and Brands without a clearly defined offer and positioning will be highly exposed.  We should also note that only a relatively small reduction in consumer spending will see declines in the total retail sectors performance. Noting that retail trade rose by a 0.1 per cent in March,  these March figures took the annual rate of growth to 5.7 per cent.

I won’t proclaim that I can forecast anything better or different to the analyst, but I will guarantee the battle in store will continue to get tougher.  Leading brands will need to continue to provide compelling offers of value that are flawlessly executed in retail.  Every moment of truth needs to be aligned to strategy and deliver an ROI, from the customer service to shelf. For our partners we must innovate and find new ways to accelerate retail excellence, and we must do this whilst finding efficiencies.

Gerard Feehan – Managing Director