The recent collapse of Australian luxury retailer Oroton reminds us of the ongoing disruption to the retail sector caused primarily by online shopping, which incidentally is about to receive a massive boost in Australia. We have recently seen the establishment of an Amazon fulfilment centre in Dandenong South, Melbourne, which has raised anxiety levels in the retail sector. Also, I should note that low wages growth across Australia is not helping the struggling sector.
The Sydney Morning Herald has referred to the Aussie retail bloodbath and US commentators frequently refer to their own retail apocalypse. There is an element of exaggeration to the retail bloodbath and apocalypse claims, but undoubtedly the sector has been struggling in many advanced economies. Nationally, employment in retail trade has increased only slightly over the last decade, and in Queensland it may have even declined (See charts below).
I am very concerned about what this means for young people, who are disproportionately employed in the retail sector. Adverse conditions in retail trade would partly explain why the unemployment rate among young people aged 15-24 has increased from 9.6% to 12.4% over the last ten years, and why their workforce participation rate has fallen from 71.1% to 67.5%.
Sure there will be jobs in fulfilment centres and related logistics, but these jobs are probably less suitable for the majority of young people than jobs in retail stores in nearby shopping centres, which make it easy for young people to combine part-time work and study.
No doubt there will continue to be jobs in bricks and mortar retail stores. But there will not be as many as there would have been in the absence of these trends. And young people, who are typically low-skilled, may not be suitable for many of the jobs in the retailers that will thrive in the future. While reading the October issue of my second favourite magazine Monocle—a close second to The Economist—I was struck by the level of product expertise and attention to detail that Monocle suggests is required for retailers to thrive in today’s hyper-competitive retail sector. Even more so than before, retail is detail. Monocle frequently advocates the ideal of the atelier, the workshop of an artisan. This is a very high standard to aspire to for retailers and their staff.
Monocle is essential reading for anyone interested in the future of retail
Encouragingly, the October Monocle does include two Australian examples of “smart shopping solutions” in its Global Retail Survey:
- The Deli Co, Melbourne, and
- David Jones food hall at Bondi Junction, Sydney.
Also, I should note, as my good friend Dr Parisa Mahyari discussed in a guest post last year, Brisbane City Council is working hard to improve the City’s retail offerings:
So it’s not all bad news for Australia retail. This Wednesday, we will see just how much Australia’s struggling retail sector is affecting our GDP, when the ABS releases the September quarter National Accounts.
Queensland will probably bolster the national figures, given the positive news from our resources sector. As John McCarthy from the Courier-Mail reported last week:
“No one is calling it a coal boom, but the coal industry has definitely returned to the position of the state’s engine driver and economists expect it will deliver a windfall of an extra $1 billion in royalties for the State Government. One of the state’s biggest coal ports Dalrymple Bay, near Mackay, has 45 ships waiting at sea for coal, the longest queue since 2010 when floods devastated the industry.”
The resurgence of Queensland’s coal industry and the royalties boost was something I noted in my 17 November post. Let us hope for a positive set of numbers on Wednesday!