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Industry on the up

Aussie grocers reporting growth and prices on the rise

By RJ Whitehead , 29-Jan-2013
Last updated on 29-Jan-2013 at 17:19 GMT

Good news for Australia, where retail spending growth should remain steady heading into 2013. At the same time the country’s two leading supermarket chains have reported their strongest quarterly sales growth for more than a year. 

The quarterly AFGC-Chep Retail Index showed 3% growth in December 2012 over the same period last year. Looking ahead, this level of year-on-year growth is expected to hold steady in February and then also in the 2013 March quarter—with both forecast to remain at 3%.

Deflation easing

In dollar terms, retail trade turnover is expected to rise, albeit moderately, from A$21.5bn in December to A$21.6bn in February. Food price deflation has also eased, and the latest figures are consistent with the food manufacturing industry’s predictions for modest growth.

Gary Dawson, the Australian Food & Grocery Council’s chief executive, explained: “The AFGC-Chep Retail Index suggests that the start of 2013 is unlikely to produce the lift in sales retailers have been hoping for; however, some support could come from low interest rates and the increase in consumer confidence that often accompanies this.

Trading conditions remain challenging for food and grocery manufacturers. Planned capital investment to improve efficiency and productivity and a focus on innovation to capitalise on expanding Asian markets will be among the priorities for the industry in 2013.”

Supermarkets on the charge

Meanwhile, major supermarkets are expected to report their strongest quarterly sales growth for more than 12 months later this week.

Reported in AFR: “Strong sales of fresh food and liquor and higher prices for grocery staples have set the tills ringing at Woolworths and Coles, which are expected to report record Christmas turnover.”

Analysts have predicted that Woolworths will announce same store sales rising by between 2.5% and 3.5% in the December quarter. This is compared to 1.1% in the second-quarter of 2012 and 2.3% in the first-quarter of this year.

Sales at Coles are expected to jump by at least 4% compared to 3.7% in the first-quarter of 2013, and could be its strongest growth rate in four quarters. Combined, the chains should see their strongest growth rate in five quarters.

Earlier this month it was reported that Australia had the fastest falling food prices in the developed world. Local food costs had dropped 2.7% in the 12 months to the end of September.

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