Some of Australia’s largest retail chains are bracing for a difficult year ahead as sales begin to suffer from downbeat consumers.

Electronics chain JB Hi-Fi revealed on Monday that its sales have taken a dip in the first weeks of the new financial year.

Both JB Hi-Fi and subsidiary The Good Guys are struggling, with annual comparable sales growth down 2.9 per cent and 12 per cent respectively since July 31.

“The group has seen increased variability in category performance,” JB Hi-Fi Group boss Terry Smart said on Monday.

“We will adapt and respond to the changing retail conditions to ensure we remain the No.1 destination for our shoppers.”

The trading update, which was accompanied by the retail group unveiling a slightly smaller $524 million full-year profit, is just the latest sign a retail squeeze is under way.

Myer revealed last week that while its sales are still increasing in the new financial year, it was being hammered by deteriorating trading conditions heading into late 2023.

And it won’t be the last – Australia’s big retailers are all reporting their annual results in the next month and the outlook is gloomy.

Veteran retail consultant and head of Retail Doctor Group Brian Walker said household names won’t be immune from a slowing economy.

He said successive interest rate hikes and the cost-of-living pressures facing families were sparking a huge consumer retreat.

“Volumes were down in the third quarter. There’s no doubt pressure is building,” Mr Walker said.

“We’re still out there socialising and wanting an experience, but what we are doing is being far more discerning with our spending.“

Myer’s ‘headwind’

The cloudy trading outlook was summed up by Myer chief executive John King last week.

He referenced “prevailing macroeconomic headwinds that have buffeted the retail sector”.

Translated, that means consumers are keeping a tighter hold on their purse strings and retailers are having to do more work to convince them to buy products.

Mr Walker said retailers of luxury goods wouldn’t be so terribly affected by the slowing economy because wealthier shoppers are insulated.

But most other traders will increasingly feel the pain, he said.

“It’s in the mid-market and the value retail areas where there’s definitely a squeeze on discretionary expenditure,” Mr Walker said.

“And what’s the heartland of a business like JB Hi-Fi? It’s mid-market Australia.”

The shopping pullback has been evident in a slew of recent economic figures, from a big slowing in retail sales to lower household spending in recent months.

Australians are purchasing far less discretionary goods such as clothing, appliances and furniture, according to recent figures published by the National Australia Bank (NAB). 

The latest Australian Bureau of Statistics (ABS) data shows consumers spent less on clothing, footwear and personal accessories in June, with sales down 2.2 per cent, while spending at department stores fell 5 per cent.

Spending on household goods fell a comparatively small 0.1 per cent after a bigger slide in previous months.

And who could blame shoppers for spending less? Millions of families are still trying to find room in their budgets for mortgage bills after more than $1000 was added to typical repayments in just a year.

That’s come at the same time as the cost-of-living crisis has become more acute for essentials like energy bills and rent prices.

One positive of the retail slowdown, however, is that retailers are starting to discount products more, with prices for popular goods in the furniture and appliance categories falling over the past six months.

Mr Walker predicted retailers will increasingly turn to sales and promotions to clear stock as consumer appetites wane.