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Fifty-eight percent of retailers cut staff as 34.5 percent warn of potential business closures.
According to a new Australian Retail Council (ARC) report, the Australian retail industry is in dire financial straits. Rising fuel and supply chain costs are resulting in mass job cuts and threatening businesses' ability to operate. Retail represents $444 billion, or close to one-fifth of Australia's economy, and combines with reduced consumer spending and record low retailer confidence to form a "perfect storm" of price pressures.
The situation is expected to get worse: 82.8% of businesses have stated that continued disruption will seriously affect their ability to generate profits. In addition, 34.5% of retailers believe they are at risk of going out of business due to current market conditions, and 7.8% expect to be out of business within months if these trends continue. The leading driver of cost increases is fuel and freight. 90% of retailers say they have seen an increase in their freight costs, with many retailers seeing their freight costs increase by over 10% and almost 20% seeing an increase of over 25%. 67% of retailers believe high fuel costs are negatively affecting their businesses.
Despite substantial cost pressures, more than half of retailers (55.6 percent) continue absorbing increases rather than passing them to consumers. However, 24.8 percent expect to transfer most or additional costs to customers, potentially further constraining consumer spending. The outlook remains bleak, with 96.6 percent of retailers expecting conditions to worsen over the next 12 months. Supply chain challenges are already having significant or critical impact on over half the sector (50.4 percent).
ARC CEO Chris Rodwell emphasized that reducing diesel excise represents the fastest mechanism to ease business pressure and prevent further job losses. The retail council's advocacy reflects industry desperation as Australia's largest employment sector faces unprecedented financial headwinds threatening thousands of jobs and numerous business closures.
Business Honor views the retail cost crisis as a strategic shift requiring urgent government intervention.
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