In mid-2009, early in the global financial crisis, the Australian government mailed out tens of millions of $900 cheques – $8 billion worth in fact. In hindsight, it was one of the many brave things that governments were doing worldwide to prevent our global economy from stagnating. It worked and millions of shoppers went to stores, as we did back then, and allegedly bought flat panel televisions.
These were new, shiny and expensive and were wanted by shoppers who were mid-stride upgrading from old-style TVs. In reality, all retail figures bumped up, especially bottle shops and pubs. And why wouldn’t you celebrate with a drink or two with your free money?
In 2019, we have just passed significant tax savings which will feed into the economy and, it is assumed, will once again drive a huge retail rush to help our large declining engine room of suburban jobs. Sadly, I don’t think it will. It’s 2019, not 2009. That ship’s sailed. I’ll come back to that later.
In 2019, we are trailing other economies that went through true pain in the 2008 to 2012 GFC. We didn’t feel pain, cosseted as we were by shiploads of iron ore and coal heading north to China and India. We had a strong economy, stronger retail sales, higher interest rates and a very strong AU dollar. Life in Oz was not just good, it was top of the world order.
Things are different in 2019. Sure, we’re again being helped by iron ore prices but our job rates are stagnating. In the physical retail sector, I truly believe we are technically in recession with only job losses being experienced across the entire retail sector. In top-line dollars, sales via bricks and mortar stores are in a long and continuous decline. We are closing stores, no longer opening as many new stores, and still washing through deeply discounted excess stock in many of our national retailers – some of that stock is 3 years old.
All is not well in the land of physical retail whilst over the fence, the green grass of online retailing continues to grow. In fact, we are where the US and UK were three years ago. Our next phase in the transition is to close out the remaining poor performing stores and invest heavily in technology to drive productivity.
But back to the present. So, if our retail stores aren’t going to see a huge increase in sales revenue off the back of tax cuts, where is all the money going to go? Well, with a low AU dollar and low interest rates, not as much will go into international air travel. Cruise ships though? Well, they’re going to keep sailing at an ever-increasing rate.
Now that new infrastructure is in Sydney, Brisbane and other key ports, our deep passion for saltwater will attract a good proportion of those tax cuts. It’s not a bad thing, just not much help to retail stores.