Household goods sector leads retail spending
THE household goods sector is leading the way in improved retail spending, indicating strong conditions for large format retail as Australians spend up amid the low interest rate environment and strong housing market.
In the 12 months to March, our spending on household goods improved by 8%, the highest of all retail categories.
Sales volume growth has also been strong in the category, rising by 11.3% over 2014 - the strongest annual growth rate for the sector in over 10 years.
"With low interest rates and a strong housing market, Australians are investing more in their castles," Colliers International head of retail Michael Bate said.
"This is great news for our large format retail sector, which is enjoying favourable conditions as hardware, garden supplies, electrical goods and furniture are all back in vogue."
According to the research, rentals in the large format retail sector have remained stable over the past six months, with select markets starting to see some upside in rents.
The pipeline of new supply within the large format sector has been dominated by the hardware category.
Strong growth across the sector has been driven by rising house prices and consolidated by a lift in housing supply and transactions, and is also reflected in the strong recent performance of hardware retailer Bunnings.
Retail sales for the rest of the year are expected to continue to grow steadily, at similar rates to 2014.
Spending will be supported by low interest rates, a lower Australian dollar (meaning less offshore online shopping and travel overseas) lower fuel prices and the benefits from a strong housing market underpinning demand for household goods and large format retail, but also for more discretionary spending.