Retail and wholesale trade
Outlook
Growth in the retail trade industry is expected to be modest in 2023-24. Pressure on household budgets from high inflation and sharp increases in interest rates have constrained spending. However, these pressures are expected to ease towards the end of 2024. The outlook for wholesale trade will broadly track private investment activity, as large investment projects require significant logistical support.
In 2022-23, the Territory retail and wholesale trade sector contributed $1.6 billion to the Territory’s economy, a similar value to 2021-22, and its share of GSP increased from 5.2% to 5.8% in 2022-23. Both the retail and wholesale shares of GSP increased 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 economy.
In the short term, the retail and wholesale trade sector continues to 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 spending has fallen as rising prices and high interest rates constrain household spending. Consumers are adjusting their shopping behaviours in response to the rising cost of living. It is anticipated the retail and wholesale trade sector will start to return to modest growth in 2024-25 as inflation eases, and disposable incoomes grow.
Retail trade
Retail trade’s contribution to GSP declined by 2.8% to $778 million in 2022-23. Nominal retail trade turnover, however, increased by 3.4% in 2023. This increase was largely due to price increases, as in real gross value added terms (volumes), retail turnover fell by 1.2% (chart 12).
Chart 12: Retail sales in the Territory (seasonally adjusted)
Source: ABS, Retail Trade, Australia, Cat. No. 8501.0
Over 2024, household consumption habits are expected to move closer to pre-pandemic patterns. Services spending, which had been relatively high post-pandemic, should continue to decline while goods spending is likely to be relatively stable. The Australian household saving ratio has fallen from the high levels during covid to low levels.
Over the medium term population growth will support growth in retail turnover.
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 Civic and State Square Redevelopment and Northern Territory Art Gallery
- redevelopment of 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
- Godinymayin Yijard Rivers Arts and Culture Centre in Katherine
- Gunyangara (Gove Port) tourism precinct
- Katherine East Neighbourhood Centre, retail and commercial precinct.
Sentinel Property Group plans to improve the layout and security at Casuarina Shopping Centre by building a new three-storey carpark, reconfiguration of the Trower Road entrance and creating new tenancies at the ground level. The redevelopment could cost up to $20 million with work anticipated to begin during the 2024 dry season and be completed by 2025.
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, 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 grew by 4.6% in 2023. Nationally, online sales increased by 0.8% in 2023 in year-on-year terms, according to the Australia Post e-commerce update. Online retailing expenditure is only partially captured in 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 2022-23 the wholesale trade industry decreased by 1.2% to $852 million in the Territory, compared to a 2.5% increase nationally.
At the end of June 2023, the number of businesses in the wholesale trade industry in the Territory fell by 2.1% to 324. Despite the decrease, the number of businesses is in line with the 10-year average of 325 (Chart 13). All types of wholesale businesses experienced a decline except for machinery and equipment wholesalers.
Chart 13: Number of wholesale businesses, by type
Source: ABS, Counts of Australian Businesses, including Entries and Exits, Cat. No. 8165.0
Infrastructure investment can provide significant support to the wholesale sector. 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. Other projects that will facilitate future growth in the wholesale trade industry include the Tanami Road upgrades, which will support movement of freight, and the development of the Marine Industry Park.
For the latest data on the retail and wholesale trade sector, refer to the Territory Economy website.