Can anyone remember the last time we sailed into the end-of-year buying season with confidence and optimism? It’s been a rough few years and, with the recent increases to interest rates, many people feel this one isn’t looking rosy either. But is that the case? Forewarned is forearmed, so let’s examine what’s really happening.
This May, Anthony Albanese became Australia’s 31st Prime Minister, sweeping aside almost a decade of conservative rule. Analysts looking at the numbers suggest that it was women who led the charge in deciding Australia’s new direction. Voters wanted change on issues such as climate
change, integrity in politics, equality and growth. Mr Albanese’s Labor government has hit the ground running on all of these tasks. Legislatively,
there was immediate action in Parliament to support Labor’s key policy priority areas, specifically aged care, climate change, family and domestic violence leave, and workforce shortages.
Jobs and Skills
Just one of Labor’s fast-moving initiatives was the long-awaited Jobs and Skills Summit, which brought together over 140 representatives from government, industry, unions and academia to examine potential solutions to crippling labour and skills shortages. It was the most significant,
collaborative and in-depth look at the issues in ten years.
Widely praised for the cooperation and agreement reached by all parties attending (except the LNP who chose not to participate), the two day summit ended with a unanimous feeling of optimism and a spirit of goodwill to address the problems discussed. Important signals about the future of industrial relations were addressed, with an emphasis on making sure small and medium businesses receive the same access to employer and employee bargaining as larger businesses. A review of the Fair Work Commission will look at how awards can be constructed to maintain workplace protections while meeting the growing need for flexibility in the workforce.
Engaging more Australians in meaningful work was also flagged as crucial by the discussions at the summit. Workplaces need to be accommodating of all workers, regardless of their background – and critically, this issue was discussed by business leaders in the same tones as that of union leaders and social service workers.
Building a stronger workplace for women was a particular priority, and the government’s childcare reforms, aged care reforms and commitment to
increase flexibility in the workforce are all essential for increasing women’s participation in the workforce.
An additional $1 billion will be poured into training to support 180,000 fee-free TAFE places in 2023. The discussions also flagged helping all businesses engage with digital transformation for their circumstance as a crucial point to be addressed over the next three years, as well as ensuring Australians have the digital skills to maximise future productivity.
In short, there was something for everyone, and with clear benefits to the retail industry. While a two day talk-fest can’t solve all the world’s problems
immediately, the feeling of optimism was tangible, and – for the first time in a long time – a clear path forward emerged. All these benefits will, of course, flow to the jewellery industry, if not now then in the foreseeable future.
The Australian Retailers Association (ARA) attended the summit and was pleased with the outcome.
“What’s important now is to continue building on the positive conversations started in the room while establishing a solid foundation for substantive
reform,” said Sam Doyle, the ARA’s Policy Advisor.
“We have reason for optimism and the ARA will continue to work with government, unions and civil society to get the best outcome for our
members and sector.”
Given that employment in Australia’s retail sector, and the jewellery sector in particular, is dominated by women, the results of the Jobs and Skills
Summit is likely to have a lasting and positive impact on our industry.
Cost of Living
Federal Treasurer Jim Chalmers remains cautiously optimistic about Australia’s present economic reality. In a recent address on the state of the
economy he made a number of forecasts that will likely set expectations and become key to the way things unfold over the coming months.
Inflation, he says, is expected to peak at 7.7 percent in December, though things will calm down after that. By June of 2023, he expects inflation to move to 5.5 percent, returning to a 2-3 percent target band by 2024. Chalmers noted that inflation is “primarily, but not exclusively” global.
He flagged unemployment as remaining low and forecast nominal wages to see 3.75 percent growth in both the 22/23 and 23/24 financial years.
Paul Zahra, CEO of ARA, says the retail sector continues to perform remarkably well considering these figures.
“Our sector saw trade up 16.5 percent compared to the 12 months prior,” he said last month. “It’s an incredible result given the inflationary pressures
consumers are under at the moment. Confidence remains low, but that hasn’t translated yet into reduced spending.”
He added a sobering, but not unexpected, caution. “With inflation yet to peak and the full impact of increased mortgage repayments yet to flow through to household budgets, we may see sales soften in the months ahead.”
The Silly Season
Father’s Day is the last gift-giving event before Christmas and traditionally provides retailers with a barometer of how things might fare over the
festive season.
Despite the squeezes on discretionary spending, the Australian Retailers Association reported that Australians spent $735 million on Father’s Day gifts this year. Purchases were down on last year’s projections.
Interestingly, an ARA/Roy Morgan snap poll on Father’s Day spending saw some emerging trends that are critical for jewellers to be aware of.
Consumers are thinking more about sustainability when it comes to their purchases, with 55 percent saying they intended to buy a gift that’s
environmentally friendly or has sound eco-credentials. The average spend was $95, up marginally on last year.
More than one quarter (27 percent) of consumers reported that they intended to buy their gifts online. Coupled with that statistic is the recent urging of Australia Post chief executive, Paul Graham, for Australians to do their online Christmas shopping now.
“We’re ready for it,” he said, “but there are going to be some challenges.” Jewellers with online stores should already be well prepared for
Christmas sales.
“There’s no doubt it’s an incredibly difficult period for many businesses and consumers as inflationary pressures take hold,” said Paul Zahra.
“Mortgage holders are under added financial stress with four interest rate hikes in a row, and with consumer confidence waning, it’s not a surprise to see the spending forecasts for Father’s Day down a bit this year.”
But he also pointed out that retailers should be encouraged by the $735 million spend on Father’s Day. Consumers are probably feeling the squeeze when it comes to discretionary purchases, but this Christmas also comes at the end of some very long, difficult years.
Looking ahead
A new government – one that is showing every sign of proactively engaging with voters and working to create a stronger economy, a solid foundation for workplace growth, and a care and education sector that will encourage greater workforce participation – has lent many
people a sense of optimism.
With good news and positive change on the horizon, there’s a strong chance that consumers will spend accordingly this Christmas – in hope, in celebration and in reward for getting through the trials of the last few years.
So, break out the tinsel!
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