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Deloitte Says Supermarket Profits Being Squeezed

An report by firm Deloitte released today asserts that weak growth in income will continue to squeeze the retail market, with some exceptions.

They say that “while supermarkets have survived the competitive environment by pushing down supplier prices, costs may not have much further to fall and profits are being squeezed.”

“Supermarket and catered food operators are now relying on population growth to increase their sales”

Deloite said it expects retail sale growth to continue to slow from 2.5% in 2015-2016 to 2% in 2016-2017.

The report also asserts that Australia’s non-food retail spending has shifted away from household goods and towards apparel.

The company noted that the value of non-food turnover increased by 3.4% over the year in real terms, a figure notably higher than the 0.7% of food retailers.

“Transformation strategies by Myer, David Jones and Kmart/Target, as well as the hype surrounding competitive international fashion entrants has had a huge effect on turnover in these categories,” the company said.

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