Fuel retailing has the highest business failure rate at 5.4 per cent over the past 12 months, new data has revealed.
Research from CreditorWatch, a leading Australian credit-reporting bureau, showed that fuel retailing and food retailing both top the list of retail sectors of businesses that have failed over the past 12 months, each with a 5.4 per cent failure rate.
Anneke Thompson, Chief Economist at CreditorWatch, said that Australian consumer confidence is likely to remain weak until there are two or three cuts to the cash rate.
“Only then will mortgage holders start to feel more confident that they have some breathing space in their monthly budget.
“Given we are unlikely to see the second or third cut to the cash rate until the final quarter of 2025 financial year, we expect that insolvencies in the retail sector will increase, especially amongst smaller, discretionary retailers. The retail trade sector has already recorded a 35 per cent increase in insolvency rates over the year to April 2024.”
The external administration rate of fuel retailers is also top of the list, with 0.81 per cent of businesses appointing an external administrator compared to 0.60 per cent of food retailers, and 0.74 per cent of other store-based retailing.
Consumer spending in Australia remains weak, with retail spending staying flat since the start of 2024. While Treasury forecasts that income tax cuts and cost of living measures announced in the budget will assist in a recovery in real disposable income over the 2025 financial year, it remains to be seen if this will translate into increased spending in the retail sector.
To stay up to date on the latest industry headlines, sign up to the C&I e-newsletter.