Retail and wholesale trade

Outlook

Growth in the retail trade industry is expected to slow in 2022-23 as a result of high inflation and rising interest rates in the short term. The outlook for wholesale trade will track private investment activity, as large investment projects require significant logistical support.

In 2021-22, the Territory retail and wholesale trade industries contributed $1.6 billion to the Territory’s economy, a similar value to 2020-21. The contribution made by the retail and wholesale industries decreased from 6.5% to 5.2% in 2021-22. Both the retail and wholesale shares of GSP decreased from the previous year. The sector’s contribution to GSP is relatively low compared with other jurisdictions, reflecting the dominance of the government and community services and mining sectors in the Territory.

In the short term, the retail and wholesale trade industries face challenges on both the supply and demand sides. On the supply side, labour shortages and higher input costs are impacting margins. On the demand side, consumer confidence has fallen as rising prices constrain household budgets. Consumers are adjusting their shopping behaviour in response to the rising cost of living. It is anticipated the retail and wholesale trade sector will return to modest growth over the medium term once inflation moderates and real wage growth picks up.

Retail trade

Retail trade’s contribution to GSP increased by 1.7% to $792 million in 2021-22. Nominal retail trade turnover increased by 2.8% in 2022. This increase was entirely due to price increases. In real terms, retail turnover fell by 3.1% (Chart 11).

Chart 11: Year-on-year change in the retail and wholesale trade sector

Source: ABS, Retail Trade, Australia, Cat. No. 8501.0

Over 2023, household consumption habits are expected to move closer to pre-pandemic patterns. In particular, services spending should continue to grow while goods spending is likely to decrease. The Australian household saving ratio continues to decline from the high levels seen during COVID-19.

Over the medium term it is expected that population growth will be the main driver of growth in retail turnover. Stronger wage growth over the outlook period should also contribute to growth.

Developments likely to support retail investment and turnover in the Territory include:

the Darwin City Deal project to revitalise the central business district (CBD) including the Darwin Education and Community Precinct, Civic and Northern Territory Redevelopment and Northern Territory Art Gallery
redeveloping Jabiru into a tourism and regional service hub
CBD revitalisation in Alice Springs, focusing on heat mitigation and enhancing community safety through environmental design
the National Aboriginal Art Gallery in Alice Springs
Katherine East Neighbourhood Centre, retail and commercial precinct.

In 2022, Sentinel Property Group acquired the Casuarina All Sports Club. The acquisition of the club is part of Sentinel’s long-term plan to develop Casuarina into a town centre and expand on the retail component to include residential developments. With over 8 million visitors to the centre each year it is the Territory’s largest retail complex.

There are further unfunded proposals as well as smaller funded projects and programs in the pipeline such as the Katherine Logistics and Agribusiness Hub and Darwin International Airport stage 3, which would support retail investment across the region. Infrastructure and land use planning are being fast-tracked in major urban development zones such as Holtze, Coolalinga and Humpty Doo, which will provide future areas for population growth and commercial development.

Online sales in the Territory were steady in 2022, after growth of 11.2% in 2021. Nationally, year-on-year growth in online sales decreased by 2.5% in 2022 following an 8.2% increase in 2021, according to the National Australia Bank’s online retail sales index. Online retailing expenditure is only partially captured in the Australian Bureau of Statistics (ABS) data, as it only reflects online retail sales by Australian retailers. E-commerce shops can be located in other jurisdictions or overseas, meaning growth in online retail expenditure does not directly translate to growth in the retail industry in the Territory.

Wholesale trade

In 2021-22 the wholesale trade industry decreased by 1.5% to $831 million in the Territory, compared to a 1.3% increase nationally. With increased private investment activity over the outlook period, growth in the wholesale trade industry is expected to improve. There is potential for greater growth if proposed major projects reach final investment decision.

Growth in the wholesale trade sector in the Territory is dependent on infrastructure investment to support that growth. Contribution to economic output tends to move with investment projects, which require significant logistics support, particularly during construction stages. In the Territory, this relates to industrial storage and equipment, transport and food wholesaling.

The Territory is progressing development of the Katherine Logistics and Agribusiness Hub, which will assist rural and resource industries to link in with national supply chains and connect with other sectors of the economy. In addition, a supply chain database is being developed to collate the freight and industrial requirements, and impacts of known future developments across the agribusiness, minerals, energy, manufacturing, defence and social sectors. This data will become the evidence base to support freight and land use investments.

Other projects that will facilitate future growth in the wholesale trade industry include the Tanami Road upgrades, which will support the movement of freight, and the development of the Marine Industry Park.

The number of wholesale businesses operating in the Territory has continued to grow with 17 additional businesses since 2019, increasing by 5.4%. At the end of June 2022, there were 331 businesses in the wholesale trade industry in the Territory (Chart 12).

Chart 12: Number of wholesale businesses, by type

Source: ABS, Counts of Australian Businesses, including Entries and Exits, Cat. No. 8165.0

For the latest data on the retail and wholesale trade sector, refer to the Territory Economy website.