Retail Trade

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<p><img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>City of Melbourne councillors voted recently to implement the 2016-20 Bicycle Plan.</p>
<p>This followed public consultations that included two phases of community engagement and the release of a draft plan last October. Features of the plan, which has a budget of around A$2 million a year over four years, include:</p>
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<p>upgrading busy cycling routes;</p>
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<p>increasing bicycle parking;</p>
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<p>improving end-of-trip facilities;</p>
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<p>conducting safety campaigns; and</p>
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<p>undertaking research.</p>
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<p>Most inner-Melbourne cyclists would likely welcome this renewed commitment to improving the cycling environment. It is important, though, to put this expenditure into perspective.</p>
<p>A A$2 million-per-year plan for the population of about 127,000 who live in the City of Melbourne (about A$16 per person) is a pittance compared to the 20-year, US$600 million Bicycle Plan 2030 in the US city of Portland, Oregon. With a population of about 619,000, the US$30 million-a-year average works out to more than US$48 per person. Portland is mooted as one of the most cycle-friendly cities in the world.</p>
<h2>Criticism of the plan</h2>
<p>Days before the Melbourne councillors voted on the plan, a Herald Sun editorial said:</p>
<p><span style="line-height: 1.3em;">"Melbourne City Council appears hellbent on turning the city into cyclist heaven … More likely this will soon turn the CBD into an economic wasteland as drivers take their business elsewhere as well as their shopping."</span></p>
<p>The assertion that installing cycling infrastructure in inner Melbourne will hurt the local economy defies the evidence from a plethora of case studies.</p>
<p>There are numerous international examples where local business-owners have over-estimated the proportion of their customers who travel by car. Consequently, they have considered parking as an overarching issue of primary concern.</p>
<p>They have often resisted anti-car, pro-active transport infrastructure changes – such as removing on-street parking and car lanes, and creating shared paths – on the premise that these will be bad for business.</p>
<p>But such changes have often resulted in increases in retail activity as well as jobs, land value and tourism.</p>
<h2>Economic impact of cycling infrastructure</h2>
<p>In Valencia Street, San Francisco, traffic lanes were slimmed to slow down cars and accommodate other road users. Nearly 40 percent of merchants reported increased sales. More than 60% reported an increase in the number of customers who ride bicycles.</p>
<p>New York implemented a raft of changes across the city including traffic calming, separated and protected bike lanes, and dedicated bicycle signals. These changes resulted in significant rises in retail sales, beating the Manhattan average for the same period and substantially outpacing performance on nearby unaltered streets.</p>
<p>The city’s Department of Transport later released a report presenting and explaining the robust methodology developed for evaluating the economic effects of these “Sustainable Streets” improvements. This report is available for use by other cities and public agencies.</p>
<p>In Bloor Street, Toronto, a study of merchants and patrons found only 10 percent of patrons drove to the area. A majority of merchants believed that a bike lane or widened footpath would increase business and that off-street parking lots would cover the reduction in on-street parking. These findings from Canada demonstrate that local business-owners don’t always oppose improvements in cycling infrastructure at the expense of cars.</p>
<p>There have even been case studies in the City of Melbourne itself revealing the benefits of sacrificing infrastructure for cars to make way for bicycles.</p>
<p>A study of Lygon Street, Carlton, found that while the average cyclist’s retail spending is only $16.20/hr compared to a car driver’s $27.00/hr, six bicycles can park in the space required for one car. Therefore, while one car space equates to $27.00/hr retail spending, six bicycle spaces equate to $97.20/hr.</p>
<p>That puts a new light on the claims by our Herald Sun editorial:</p>
<p><span style="line-height: 1.3em;">"Motorists will be dismayed to learn that doubling the number of bike racks on city streets will mean fewer carparking spaces … Councillors must surely be aware of the problems they are creating for the thousands of businesses long established in the city."</span></p>
<p>Previous evidence suggests that inner Melbourne businesses will prosper under a changing transport environment – and not “see their money spent against their business and personal interests”, as the Herald Sun suggests.</p>
<p>On the contrary, improvements in bicycle infrastructure are likely to have a positive economic impact in their own right. That’s before we even consider the other positive effects. Physical inactivity costs Australia $13.8 billion a year when the health impacts were last assessed in 2008. Traffic congestion was estimated to cost Australian capital cities $16.5 billion last year.</p>
<p>The City of Melbourne and advocacy groups should continue pursuing bicycle infrastructure improvements – even at the expense of cars – where feasible.</p>
<p><span class="fn author-name">Jerome N Rachele is r</span><span style="line-height: 1.3em;">esearch fellow in Social Epidemiology, Institute for Health and Ageing, Australian Catholic University and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/jerome-n-rachele-251972" target="_blank">here</a>.</span></p>
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Bicycle-friendly changes are good for retail business

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<p><span style="line-height: 1.3em;">The Retail Trade figures for March did a little better than expectations in rising by 0.4 percent in seasonally adjusted terms. </span></p>
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<br><div>Despite the reasonable monthly result, year-on-year growth has slowed to be a bit below the 5-year average. </div>
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<br><strong><span style="text-decoration: underline;">State versus state</span></strong><br><br><div>The strong housing markets in Sydney and Melbourne have generally supported household consumption since 2013.</div>
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<br><div>At the state level retail turnover growth has been led through the cycle by New South Wales and Victoria, but now there is some evidence that other states are beginning to shine. </div>
<br><div>Since a new IKEA was opened in sleepy Canberra in November, the ACT has shot the lights out to lead annual retail turnover growth by a wide margin. </div>
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<br><div><strong><span style="text-decoration: underline;">Industry groups</span></strong></div>
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<div>The best industry performers in the month were clothing and footwear (+1.1 per cent) and food (posting +0.6 per cent rebound after some soft readings). </div>
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<img src="/images/2016/05/10/B7.jpg" alt=""><br><br><div>Year-on-year household goods remains the strongest performing industry. However, even here the annual rate of growth in household goods retail has cooled a little in sympathy with the cooling of house price growth.</div>
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<strong><span style="text-decoration: underline;"><br></span></strong><strong><span style="text-decoration: underline;">The wrap</span></strong><br><br><div>Overall, the monthly result was solid enough. </div>
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<div>Given that March is also a quarter-end, the Q1 retail results in chain volume measures terms were also reported, with volumes being up by +0.5 per cent for the quarter and +2.4 per cent over the year to March. </div>
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<div>Assuming that wider household consumption does something similar - and adding this in to the positive net exports result for the first quarter - it seems reasonable to expect that the economy grew at a fair pace in Q1. </div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Retail solid if unspectacular: Pete Wargent

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<p>Seasonal adjustments for department store sales have delivered a bit of a wild ride in recent years, and this month's Retail Trade figures recorded a monster -6.2 percent decline for the sector in July. </p>
<p>It's not the first time we've seen a 'far out' reading for department store retail (last time the figures snapped back the following month) - but we'll have to wait until next month to see whether that happens again.</p>
<p>In any event, this contributed a flat result in seasonally adjusted terms, for just a +0.1 percent increase in trend terms.</p>
<p>Excluding the department stores reading retail turnover would have been up by +0.4 percent for the month, so we'll have to wait and see what next month brings. </p>
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<br><div>Year-on-year retail turnover growth has sagged over the past year to just +2.7 percent, to now sit well below the half decade average.</div>
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<br><strong><span style="text-decoration: underline;">State versus state</span></strong><br><br><div>The powerhouse states New South Wales (-0.2 percent) and Victoria (-0.5 percent) unusually both recorded negative results in July, possibly because department stores have their head offices in Sydney and Melbourne, though nobody really seems to know if that's why.</div>
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<div>The only decent monthly results were seen in Queensland and South Australia.</div>
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<br><div>Over the past year the opening of a new IKEA in Canberra was the spark to create the strongest retail turnover growth in the Australian Capital Territory (ACT), while the southern states have fared relatively well over the year to July.<br><br>This month's surprise negative result knocked the quarterly and annual figures for NSW and Victoria quite hard.</div>
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<div>Note how demand in the the resources rich Northern Territory has fallen away in tandem with Western Australia, where iron ore and LNG construction projects have recently transitioned to production.</div>
<br><strong><span style="text-decoration: underline;">Department stores crunched</span></strong><br><br><div>Erm, and then there's this. Maybe everyone stopped shopping for a month and there's a rebound pending, or perhaps the timing of revenues being booked is a bit of a lottery.<br><br>Leaving aside the department stores outlier, it's become clear that the household goods boom that piggy-backed off rising house prices as now ended. </div>
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<br><div>Food retail turnover was also weak in dollar terms, in part reflective of soft food prices and intensified competition from low cost supermarkets such as Aldi.</div>
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<br>The best performing sector of the year has been clothing and footwear.<br><br>
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<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
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<div>A rubbish result! We won't know until next month whether department store retail turnover was an anomaly, but it was an inauspicious start to Q3 for retail trade!</div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Retail flat again (far out!) Pete Wargent

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<div>Retail trade turnover missed expectations in rising by a seasonally adjusted 0.2 percent to $25.66 billion, although this was the first miss in four months and came off the back of a 0.5 percent gain in October. </div>
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<br><div>The annual rate of turnover growth has eased back to 3.3 percent, comfortably below the half decade average. </div>
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<div><strong><span style="text-decoration: underline;">Around the traps</span></strong></div>
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<div>There were decent gains in November in New South Wales and Victoria, but not much to write home about elsewhere. </div>
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<br><div>The Australian Capital Territory has long been the leader in annual retail turnover growth since the opening of the Canberra IKEA, with New South Wales slotting into second spot, but growth has stalled in Western Australia. </div>
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<br><div><strong><span style="text-decoration: underline;">Smashed avo rally over?</span></strong></div>
<br><div>The best performing sector this month was 'threads 'n' treads' - clothing and footwear - and the worst, surprisingly enough, was eating out!</div>
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<br><div>Still, I wouldn't read too much into one month of figures - the trend figures show a 14.21 per cent share of total retail accounted for by takeaway food and eating out. It's never been higher. </div>
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<div>A somewhat underwhelming result for retail trade this month, though when spending on services are included Commsec estimated that spending was galloping along at its fastest level since the financial crisis. </div>
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<div class="post-footer"><em><span>PETE WARGENT </span>is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>. </em></div>
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Retail trade consolidates: Pete Wargent

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<div>Given the weak state of other sectors of the economy, the Retail Trade figures for the month and the June quarter took on an added significance.</div>
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<div>In this context, especially given soft wages and slowing population growth, the June data was happily very good.</div>
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<div>In seasonally adjusted terms retail turnover was up by 0.7 per cent for the month leading to a strong annual result to June 2015 as charted below.</div>
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<br><strong><span style="text-decoration: underline;">State versus state</span></strong><br><br><div>At the state level the impact of Sydney's housing boom and to a lesser extent that of Melbourne is evident with retail turnover rising very strongly in New South Wales and Victoria.</div>
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<br><div>Perhaps more surprisingly, in turnover terms retail appears to have fired up a little elsewhere too, particularly in South Australia. </div>
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<strong><span style="text-decoration: underline;">Industry groups</span></strong><br><div class="separator"> </div>
<div class="separator">It has been a relatively poor time for department stores retailing, perhaps reflective of increasing demand in the online shopping space.</div>
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<div class="separator">The big winner over the past year has been household goods with retail turnover pumped up by the housing prices and construction boom.</div>
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<span><span>Cafés</span>, restaurants </span>and takeaway expenditure has also continued to rise relentlessly over the past year, a trend which has been ongoing over the past decade, another shift which feeds off increased apartment dwelling.</div>
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<br><strong><span style="text-decoration: underline;">National accounts for Q2</span></strong><br><br><div>With June being the last month of the second quarter we also got the turnover figures reported in volume terms, which threw out an excellent result.</div>
<br><div>Retail volumes doubled market expectations to be up by 0.8 per cent for the quarter and 3.6 per cent for the year. </div>
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<div>Suffice to say that New South Wales (+4.6 per cent) and Victoria (+4.4 per cent) have been the retail trade linchpins over the year to June 2015.</div>
<br>This is a very notable result given that net exports (which have contributed significantly to GDP over the past year) will evidently not been doing so in the second quarter.<br><br>I looked at how Australia racked up a record trade deficit for the second quarter in a little more detail here.<br><br><strong><span style="text-decoration: underline;">The wrap</span></strong><br><div> </div>
<div>Overall this was a really good result for retail trade in the second quarter.</div>
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<div>And although the retail trade data is not necessarily representative of all household consumption this suggests that GDP for the second quarter will be held up by the strong capital city economies.</div>
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<div>Lately various surveys have hinted at gradually improving business conditions and confidence - and jobs growth has been strong over the past year at +233,600, particularly so in Sydney.</div>
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<div>On the other hand capital expenditure surveys have pointed towards very weak business investment.</div>
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<br>In that context, it is important that household consumption continues to produce sound results.</div>
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<div>The other contributor to a surprisingly upbeat GDP print in the first quarter (ex-inventories) was that of new housing, with the dwelling construction boom expected to continue over the next couple of years.</div>
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<div><a href="https://3.bp.blogspot.com/-y0n0iSGst2w/VW7aRC8nfwI/AAAAAAAAV1A/jrn7C21AbNY/s640/gdp6.jpg" target="_blank">Click to enlarge</a></div>
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<div><img src="https://3.bp.blogspot.com/-y0n0iSGst2w/VW7aRC8nfwI/AAAAAAAAV1A/jrn7C21AbNY/s640/gdp6.jpg" width="640" height="275"></div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Housing construction helps retail remain robust: Pete Wargent

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<p><span>A decent result for Retail Trade, which increased by 0.4% to a fresh high of $24.77 billion in November. Trend retail trade has increased nicely from $21.7 billion at the end of 2012 to $24.7 billion.</span></p>
<p><span>Over the past 18 months total industry retail turnover has declined only once, in July last year. </span></p>
<p><a href="/images/2016/01/12/RT1.jpg" target="_blank" style="line-height: 1.3em;">Click to enlarge</a></p>
<p><span><img src="/images/2016/01/12/RT1.jpg" alt=""> </span></p>
<p><span><span>Year-on-year retail turnover growth improved to 4.3%, which is well ahead of the 5 year average of 3.4%.</span></span></p>
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<p><a href="/images/2016/01/12/RT2.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/01/12/RT2.jpg" alt=""></p>
<p><strong><span style="text-decoration: underline;">State versus state</span></strong></p>
<p><span style="line-height: 1.3em;">The long run data suggests that retail activity has largely followed house price growth, implying in turn that the economy probably needs dwelling prices to continue rising if household consumption is not to stall.</span></p>
<p><a href="/images/2016/01/12/RT3.jpg" target="_blank"><span style="line-height: 1.3em;">Click to enlarge</span></a></p>
<p><span style="line-height: 1.3em;"><img src="/images/2016/01/12/RT3.jpg" alt=""></span></p>
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<div>Looking at the year-on-year figures suggests that retailers in New South Wales (+4.7 per cent) and Victoria (+6.0 per cent) have been the major beneficiaries of the "wealth effect" of rising house prices.</div>
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<div>Slower growth has been experienced in South Australia, Western Australia, and particularly the Northern Territory, as mining construction activity tails off.</div>
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<div><a href="/images/2016/01/12/RT4.jpg" target="_blank">Click to enlarge</a></div>
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<div><strong><span style="text-decoration: underline;">Industry groups</span></strong></div>
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<div>Over the long run much of the growth in retail turnover has been accounted for by consumables.<br><br>Although household goods retail has picked up strongly of late, department stores have struggled to main market share as online retail has taken hold.</div>
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<div><a href="/images/2016/01/12/RT7.jpg" target="_blank">Click to enlarge</a></div>
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<span>All industry groups have seen solid growth in retail turnover over the past year, with house price growth making its impact felt here too.</span><br><br><span>Household goods retail turnover has led the way for some time now, with an impressive 6.6 per cent growth over the year to November.</span><br><br><span>Perhaps surprisingly the slowest annual growth was seen in the food retailing space, while department stores saw turnover slip in the month of November.</span>
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<div><a href="/images/2016/01/12/RT6.jpg" target="_blank"><span>Click to enlarge</span></a></div>
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<strong><span style="text-decoration: underline;">The wrap</span></strong><br><br><div>Overall, a reasonable result that was in line with expectations, but one which suggested that for retail turnover to keep picking up from this level either house prices need to keep rising, or the household savings ratio will need to decline. </div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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