Retailers have called today's decision from the Reserve Bank of Australia a welcome confidence boost but warned tough times are far from over for the retail sector.
Peak bodies, the Australian Retailers Association (ARA) and National Retail Association (NRA), said the impacts of subdued consumer spending coupled with high costs of doing business have rocked the sector and a retail recovery is long overdue.
"The Reserve Bank's decision to modestly cut the cash rate is a step in the right direction. This should provide some immediate relief to households, helping restore confidence and set an optimistic tone for 2025," said ARA Chief Industry Affairs Officer, Fleur Brown.
"While a lower cash rate will help ease financial strain on businesses and consumers, we need to see this momentum continue for it to have a significant impact on spending. Retail represents almost one fifth of our gross domestic product - so we can't have an economic recovery without a retail recovery. With retail growth tracking well below five year trends we need to see continued focus on restoring confidence.
Ms Brown also noted the flow-on impact may not be immediate, with a lag effect to interest rate decisions.
NRA Interim CEO Lindsay Carroll said the cash-rate offers a much-needed boost to retail and consumer sentiment, but a lot more work needs to be done.
"The rate cut is a great start, but with a Federal Budget and election around the corner, retailers are looking for signals around sustainable economic growth," Ms Carroll said.
"For our $430 billion retail sector to thrive, we need to see focused policy making around areas such as combatting retail crime, strengthening supply chain resilience and bolstering small business support.
Retailers, especially small businesses, are vital to the economy and contributes to job creation in local communities across Australia. The success of businesses in a community reflects the community's overall well-being.
"As the nation's largest private sector employer, it's vital that retailers-both small and large-are given the confidence to continue investing in their businesses through the critical months ahead," she said.
The ARA and NRA's pre-budget submission can be accessed here.
