Retailers who experienced a boost in spending during 2020 could find 2021 to be a challenging year as consumers shift back to 'normal' spending, research firm Deloitte has stated.
As COVID restrictions ease, vaccines roll out across the country and consumers feel more confident, spending could shift from retail into non-retail sectors as Aussies return to 'normal.'
Deloitte Access Economics partner and Retail Forecasts principal author, David Rumbens said that while retail spend ended on a high in 2020, this year is likely to prove challenging.
"The retail sector tackled the COVID-19 crisis, and come out on top.
"Retail spending recovered strongly in the second half of 2020, more than offsetting the slump in June, to end higher in the year to December 2020.
"And this strong recovery was experienced across much of the sector, with nearly all segments of spend posting year-to gains in the December quarter.
"Though it was non-food spending that led the way, home-related consumption also remained elevated.
“But as is so often the case with Australian retail, and this is the same for many other national economies too, there are still some challenges ahead," he said.
Such challenges include the ceasing of JobKeeper at the end of the month and economic recovery, Rumbens explains.
"Our fiscal stimulus tap has been turned down to a drip, meaning less money for households to spend.
"Luckily, they are still more likely to feel like spending what there is given the good news on vaccines and less and less restrictions across activities that drive retail spend.
"Unfortunately for many retailers in 2021, the economic recovery and re-opening of industries will more likely be a headwind than a boon.
"This means more opportunities for non-retail spending, and an increasing shift back towards travel and hospitality over the year.
"A return to ‘normal’ also poses a bigger risk to some retailers who have picked up their share of wallet over the past year.
"This includes household goods retailing, where the durability and one-off nature of the purchase increases the risk of a sharper pull back in spending," he said.
The forecast comes as the ABS reported a 1.1% decline in retail turnover in February (preliminary figures).