Regional BusinessRegional BusinessReviewReview

3rd Annual Business DinnerJames Hardie Dining Room

Charles Sturt University

Prepared by theWestern Research Institute

22nd March 2004

OutlineOutline

Regional Economy

National Retail Industry

Regional Retail Sector

Changes in Central West Retail

Key drivers and success factors

Retail Outlook

General Economic Outlook

National and RegionalNational and Regional

Source: Australian Bureau of Statistics

Australia Central

West

Economic Growth + 3.5% pa N/a

Unemployment 5.8% 5.1%

Population Growth + 1.2% pa + 0.1% pa

Sales PerformanceSales Performance

Source: Regional Business Survey sponsored by the Central Western Regional Development Board and Country Energy

-6

-4

-2

0

2

4

6

8

10

Net

Bal

ance

Regional ComparisonRegional Comparison

Source: Regional Business Survey sponsored by the Central Western Regional Development Board and Country Energy

-2

-1

0

1

2

3

4

5

CentralWest

Mid North Coast

Murray Murrumbidgee North Western

Northern SouthEastern

Net B

alanc

e

Sector ComparisonSector Comparison

Source: December quarter Regional Business Survey sponsored by the Central Western Regional Development Board and Country Energy

-3

-2

-1

0

1

2

3

4

5

Agriculture Business andProfessional Services

Tourism Manufacturing andMining

Retail

Net B

alan

ce

Significance of RetailSignificance of Retail

Australia Central West

Value Added $34 billion $325 million

Employment 1.3 million 10,300

Sources: ABS and WRI Input Output Table

Retail Employment ProfileRetail Employment Profile

Source: Retail Industry Profile prepared by the Australian Retailers Association

12% of Australian workforce60% female50% of all young people with a job work in retailTwo-thirds are casual / part-time25% of employment flow-on effects captured by retail

Retail Sales PerformanceRetail Sales Performance

Source: Regional Retail Survey sponsored by Reliance Credit Union

0.0

2.0

4.0

6.0

8.0

10.0

Mar-03 Jun-03 Sep-03 Dec-03

Regional ComparisonRegional Comparison

Source: Regional Retail Survey sponsored by Reliance Credit Union

0

2

4

6

8

10

Bathurst Blayney Cow ra Dubbo Forbes Lithgow Mudgee Orange Parkes Wellington

Net

Bal

ance

Sector ComparisonSector Comparison

Source: Regional Retail Survey sponsored by Reliance Credit Union

0

2

4

6

8

10

Clothing Food Hospitality Household Motoring OtherGoods

Recreational

Net

bal

ance

Retail Shift Share AnalysisRetail Shift Share Analysis

Source: Central West Shift-Share Analysis commissioned by the Central Western Regional Development Board

Analysed job growth 1996-2001Looking for sectors growing above state & industry averagesOutperforming retail sectors:

Specialised food + 23%Furniture & houseware + 71%Other Personal & household + 46%

Building ApprovalsBuilding Approvals

Source: Australian Bureau of Statistics

Change in value of Building Approvals(Four Quarter Moving Average)

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Mar-99 Sep-99 Mar-00 Sep-00 Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03

Central West

NSW

Key Industry DriversKey Industry Drivers

Level of consumer confidenceRate of household formationLevel & changes in interest ratesPopulation growthEconomic growthHousehold disposable income

Source: IBISWorld

Key Success FactorsKey Success Factors

Good product offeringLoyal customer baseClear market positionSuperior after sales serviceAccess to latest technologiesEconomies of scaleProximity to key markets

Source: IBISWorld

Retail OutlookRetail Outlook

Retailer expectations slightly lower for March quarter of 2004Long run average sales + 4%MONASH + 1.8% in 2004-05Higher AUD increases demand for imported cars, electronics, etcIncreased competition for market share

Growth OutlookGrowth OutlookSector Central West

Share

Growth in 2004

Primary 21% + 9.4%

Secondary 18% - 0.9%

Tertiary 14% + 3.0%

Quaternary 29% + 3.4%

Quinary 6% + 4.2%

Total + 3.5%

Sources: Business Review Weekly State of the Nation 2004 and WRI Input-Output Table

General Economic OutlookGeneral Economic Outlook

Business expectations higher for March quarter of 2004Rebound in farm productionSlowdown in housing marketStrong domestic economyAUD forecasts 65.8c to 80c USPossibly higher interest ratesLow inflation in RBA 2-3% range