KPMG’s Retail Health Index (RHI) shows recovery stalled in the first quarter of 2024, although we remain confident of the revival of the sector by September 2025 given the broad tax relief coming from 1 July 2024 and the $300 per household energy bill relief in the May 2024 budget. Declining wages and improved sentiment offset higher producer prices and lower volumes, resulting in a minor improvement in the March quarter 2024 RHI.

Key challenges for the retail sector

Retail sales activity remains stagnant with virtually no nominal growth occurring. Once inflation and immigration are considered, sales activity – especially associated with discretionary spending – remains well below levels seen 12 months ago.

The increase in inflation has been interpreted by financial markets that the RBA may need to, at worst, lift the cash rate again, or at least, keep the cash rate higher for longer.

The relative profitability of the retail sector is now well below its long-term average, representing 4.7 percent of total industry profitability compared to its long-term average of 6.4 percent.

What factors are affecting the retail market?

Discretionary retail has slowed

It is unsurprising that discretionary retail has taken a hit, with low levels of consumer confidence driven by a cost-of-living crisis for many consumers.

Increase in insolvency 

Overall insolvency numbers are now well ahead of pre pandemic levels with ASIC forecasting over 10,000 companies will enter external administration by 30 June 2024, a number not seen since 2013. 

Focus on cost control 

Many retailers are focusing on cost control and cost out campaigns to optimise operating models and shareholder returns.

Read more about the future health of the Retail sector in the Retail Health Index for June 2024.

Download the latest Retail Health Index report

Download: Retail Health Index – June 2024

Quarterly insights on the future health of australia’s retail sector.

Download report (PDF 1.3MB)


The KPMG Retail Health Index (RHI) is based on a calculation that seeks to incorporate the revenue and cost drivers of a retail and consumer-focused business operating in the Australian economy, with an element of future expectations through incorporating a measure of consumer confidence.

If KPMG can help your business in any way navigate the current business environment and plan for any future developments that are facing the industry, please contact us.

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