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FEATURE ARTICLE 2: RETAIL INDUSTRY IN WESTERN AUSTRALIA


INTRODUCTION

The retail industry employs more workers (150,000) than any other industry in Western Australia and accounts for around 5% ($6 billion) of Gross State Product (GSP) each year. Retail trade has been the focus of much discussion and review in Western Australia in recent years, as it remains the only state without extended retail trading hours. This article will examine various performance indicators of Western Australia's retail industry during a decade of restricted trading hours and will compare it to the performance of other states where trading laws have been deregulated.

RETAIL TRADING HOURS IN WESTERN AUSTRALIA

The Retail Trading Hours Act 1987 applies to retail shops in Western Australia south of the 26th parallel. Retail trading hours are set down for three categories of retail: general retail shops; small shops (exempted general retail shops); and special retail shops. The trading hours of restaurants, cafes and takeaway food shops are not covered by the Act.

General retail shops are all retail businesses that are not categorised as either small shops or special retail shops. They are allowed to trade between 8.00am and 6.00pm on Monday, Tuesday, Wednesday and Friday, between 8.00am and 9.00pm on Thursday and between 8.00am and 5.00pm on Saturday. These shops cannot open on Sundays or public holidays.

Expanded general retail hours are available to car yards; shops in the central tourism precincts of Perth and Fremantle; those outside of the Perth metropolitan area and metropolitan local government authorities; and metropolitan shopping centres during special events. By comparison, general retail shops in other states and territories are permitted to trade, without restriction, seven days a week. Perth is the only capital city with restricted Sunday trading.

Small shops, or exempted general retail shops, are shops owned by up to six people who operate no more than three retail shops, and in which a maximum of ten people work at any one time. They may sell goods other than motor vehicles. They are permitted to trade up to 24 hours a day and seven days a week.

Special retail shops are considered necessary for emergency, convenience or recreational supplies and include newsagencies, bookshops, pharmacies, garden nurseries, hardware, home improvement shops, video shops, art and craft shops, souvenir shops, duty free shops, shops at sporting venues, boating shops, motor vehicle spare parts shops and shops at international standard hotels. These shops may trade between 6.00am and 11.30pm seven days a week. Service station trading hours are completely deregulated in all areas.

ECONOMIC GROWTH AND HOUSEHOLD CONSUMPTION SPENDING

It is important to note that this analysis of Western Australia's retail industry is during a period of strong economic growth having a positive impact on retail spending. The retail industries of some other states have not had the same positive influence (with the exception of Queensland). A decade of strong economic growth in Western Australia, particularly over the 5 years from 2001 to 2006, has helped fuel retail spending in the state. GSP per capita increased 31% ($12,600) to $53,000 in Western Australia from June 1996 to June 2006.

REAL GROSS STATE PRODUCT PER CAPITA, Western Australia

REAL HOUSEHOLD CONSUMPTION SPENDING(a), Western Australia

VALUE OF REVOLVING CREDIT(a), Western Australia

Western Australia recorded the equal second highest rate of increase in retail turnover along with Victoria (61%). Queensland (72%) had the greatest proportionate rise. The remaining states of New South Wales (36%), Tasmania (43%) and South Australia (49%) recorded significantly lower increases.

REAL RETAIL TUROVER(a), Western Australia

RETAIL TURNOVER(a) BY INDUSTRY GROUP, Western Australia - 2006-07

RETAIL TURNOVER(a) BY INDUSTRY GROUP, Western Australia

RETAIL TRADE INCOME AND POPULATION(a), By state, Proportion of Australian total - 2005-06

RETAIL TRADE, OPERATING PROFIT BEFORE TAX, By state - 2005-06

RETAIL TRADE, Summary of Operations ($m), by State
		2002-03	2003-04	2004-05	2005-06	Change 2002-03 to 2005-06	% change 2002-03 to 2005-06
		($Million)	($Million)	($Million)	($Million)	($Million)	%
NEW SOUTH WALES
	Wages and salaries	9 598	9 847	10 393	10 790	1 192	12.4
	Total income	93 979	97 017	104 151	104 438	10 759	11.5
	Total expenses	91 450	94 421	100 989	100 819	9 369	10.2
	Operating profit before tax	2 877	3 259	3 609	3 753	879	30.4
VICTORIA
	Wages and salaries	6 892	7 360	7 779	8 347	1 455	21.1
	Total income	66 971	73 550	78 300	81 904	14 933	22.3
	Total expenses	65 053	71 531	75 664	78 901	13 848	21.3
	Operating profit before tax	2 271	2 748	3 048	3 201	930	41.0
QUEENSLAND
	Wages and salaries	5 307	5 654	6 228	6 541	1 234	23.3
	Total income	52 726	57 398	66 736	64 143	11 417	21.7
	Total expenses	51 051	55 377	64 387	61 619	10 568	20.7
	Operating profit before tax	2 021	2 496	2 827	2 792	771	38.1
SOUTH AUSTRALIA
	Wages and salaries	1 944	2 071	2 236	2 490	546	28.1
	Total income	18 961	20 905	22 897	23 860	4 899	25.8
	Total expenses	18 337	20 153	22 152	22 900	4 563	24.9
	Operating profit before tax	730	841	859	994	264	36.2
WESTERN AUSTRALIA
	Wages and salaries	2 689	2 871	3 205	3 279	590	21.9
	Total income	26 711	30 713	34 706	33 672	6 961	26.1
	Total expenses	25 851	29 581	33 290	32 200	6 349	24.6
	Operating profit before tax	1 044	1 348	1 676	1 696	652	62.5
TASMANIA
	Wages and salaries	542	614	660	708	166	30.6
	Total income	5 388	6 150	6 717	6 757	1 369	25.4
	Total expenses	5 192	5 907	6 403	6 446	1 254	24.2
	Operating profit before tax	235	283	361	319	84	35.7
Australian Industry, Experimental Estimates, cat. no. 8155.0.

AVERAGE RETAIL COMMODITY PRICES

Perth consumers generally pay more for retail commodities than consumers in other state capital cities. Across a range of 52 selected retail commodities, Perth had the highest average price for 20 (39%) of those items in the June quarter 2007, followed by Hobart with 14 (27%). Other cities had highest average prices ranging from 4 items (8%) in Adelaide to 8 items (15%) in Melbourne.

In the June quarter 2007, Perth consumers paid the highest average prices across the states for meat; processed fruit and vegetables; and alcoholic drinks. In particular, they paid more for lamb chops ($0.37 more per kg); pork chops ($0.84 more per kg); chicken ($0.57 more per kg); sausages ($0.30 more per kg); and bacon ($1.00 more per 250g).

Perth consumers also paid more for processed peaches ($0.14 more per 825g); pineapples ($0.09 more per 450g); and peas ($0.03 more per 500g), as well as low alcohol beer ($3.63 more per carton); full strength beer ($0.86 more per carton); and a nip of scotch in a public bar ($0.67 more per 30ml). Among the state capitals, Perth consumers also paid the highest average retail prices for cheese; flour; rice; oranges; bananas; eggs; baby food; toilet paper; low alcohol draught beer served in public bars; and toilet soap.

However, consumers in Perth paid the lowest average retail prices across the states for biscuits ($0.13 less per 250g); rump steak ($1.19 less per kg); carrots ($0.39 less per kg); onions ($0.19 less per kg); chocolate ($0.43 less per 250g); and dishwashing detergent ($0.29 less per 450ml) in the June quarter 2007.

NUMBER OF BUSINESSES OPERATING IN RETAIL TRADE

There were 27,000 businesses operating in Western Australia's retail industry in 2006-07, 4% (1,100) more than in 2003-04. This growth rate was the second highest among the states behind Queensland with 6% (2,900). The remaining states had much lower rates of growth in retail business numbers, ranging from 1% (800) in New South Wales to 3% (2,300) in Victoria.

NUMBER OF BUSINESSES, Retail trade - Western Australia

CONCENTRATION OF BUSINESSES, Retail trade - Western Australia - 2006-07

RETAIL TRADE, Counts of Businesses, Western Australia, 2006-07
		Business Counts
		No.	%
Food
	Supermarket and grocery stores	705	2.6
	Specialised food	4 455	16.5
	Total	5 160	19.1
Personal and household goods
	Personal and household goods
	Department stores	24	0.1
	Clothing and soft goods	1 362	5.0
	Furniture houseware and appliances	2 775	10.3
	Recreational goods	1 623	6.0
	Other personal and household goods	4 563	16.9
	Household equipment repair services	654	2.4
	Total	11 001	40.7
Motor vehicles
	Motor vehicles	732	2.7
	Motor vehicle services	5 133	19.0
	Total	5 865	21.7
Accommodation, cafes and restaurants
	Accommodation	1 329	4.9
	Pubs, taverns and bars	591	2.2
	Cafes and restaurants	2 793	10.3
	Clubs (Hospitality)	270	1.0
	Total	4 983	18.4
Retail trade - Total		27 009	100.0
Counts of Australian Businesses, cat. no. 8165.0.

The industry classes, within the industries listed above, that recorded the largest increases in business numbers in Western Australian retail trade between 2003-04 and 2006-07 were cafes and restaurants (243 or 10%); takeaway food retailing (222 or 12%); clothing retailing (138 or 15%); automotive repair and services n.e.c. (135 or 5%); and car retailing (114 or 28%). There were major declines, however, in automotive fuel retailing (down 135 or 21%) and domestic appliance retailing (down 114 or 9%).

SMALL BUSINESS IN THE RETAIL INDUSTRY

More than half (52% or 14,040) of the businesses operating in Western Australia's retail industry in 2006-07 were small businesses (1-19 employed persons). The remainder were non-employing businesses (38% or 10,347), medium-sized businesses (20-199 employed persons) (10% or 2,556) and large businesses (200 or more employed persons) (0.3% or 93).

RETAIL TRADE, Number of Small Businesses (1-19 employed persons)
		2003-04	2004-05	2005-06	2006-07	Change from 2003-04 to 2006-07
						No.	%
NEW SOUTH WALES
	Small businesses (no.)	39 720	46 704	48 471	50 313	10 593	26.7
	Proportion of total businesses (%)	43	51	52	54	11 pts	na
VICTORIA
	Small businesses (no.)	28 569	33 663	34 701	36 723	8 154	28.5
	Proportion of total businesses (%)	43	49	51	53	10 pts	na
QUEENSLAND
	Small businesses (no.)	21 768	26 109	27 690	29 265	7 497	34.4
	Proportion of total businesses (%)	42	49	51	53	11 pts	na
SOUTH AUSTRALIA
	Small businesses (no.)	7 959	9 279	9 405	9 780	1 821	22.9
	Proportion of total businesses (%)	42	48	49	51	9 pts	na
WESTERN AUSTRALIA
	Small businesses (no.)	10 476	12 375	13 107	14 040	3 564	34.0
	Proportion of total businesses (%)	40	47	50	52	12 pts	na
TASMANIA
	Small businesses (no.)	2 856	3 258	3 453	3 597	741	25.9
	Proportion of total businesses (%)	45	51	53	56	11 pts	na
Counts of Australian Businesses, cat. no. 8165.0.

In 2006-07, the proportion of small businesses operating in Western Australia's retail industry (52%) was similar to the proportion operating in the retail industries of New South Wales (54%), Victoria (53%), Queensland (53%), South Australia (51%) and Tasmania (56%). All states recorded increased proportions of small retail businesses between 2003-04 and 2006-07: New South Wales (43% to 54%), Victoria (43% to 53%), Queensland (42% to 53%), South Australia (42% to 51%), Western Australia (40% to 52%), narrowly the highest proportionate increase, and Tasmania (45% to 56%).

PROPORTION OF SMALL BUSINESSES(a), Retail trade

NUMBER OF SMALL BUSINESSES(a), Retail trade - Western Australia

PROPORTION OF WESTERN AUSTRALIA'S TOTAL EMPLOYMENT, By industry - 2006-07

TOTAL EMPLOYED PERSONS, Retail trade - Western Australia

NUMBER OF EMPLOYED PERSONS, Retail Industry, Western Australia
	1996-97	2006-07	Change 1996-97 to 2006-07	% change 1996-97 to 2006-07
Selected industry group	No.	No.	No.	%
Specialised food retailing	22 317	31 773	9 456	42.4
Supermarket and grocery stores	22 895	27 435	4 541	19.8
Cafes and restaurants	18 599	23 381	4 781	25.7
Motor vehicle services	22 471	17 618	-4 853	-21.6
Furniture, houseware and appliance retailing	11 442	17 221	5 779	50.5
Other personal and household good retailing	15 225	15 778	553	3.6
Accommodation	10 845	13 353	2 508	23.1
Clothing and soft good retailing	8 827	11 448	2 620	29.7
Department stores	9 163	10 226	1 063	11.6
Recreational good retailing	6 662	8 523	1 861	27.9
Motor vehicle retailing	5 296	8 419	3 123	59.0
Pubs, taverns and bars	5 433	8 308	2 875	52.9
Household equipment repair services	1 693	1 945	252	14.9
Clubs (hospitality)	2 355	1 612	-743	-31.6
Labour Force, Australia, cat. no. 6202.0.

Between 1996-97 and 2006-07, employment growth was highest in specialised food retailing (up 9,456 or 42.4%), followed by furniture, houseware and appliance retailing (up 5,779 or 50.5%) and cafes and restaurants (up 4,781 or 25.7%). There were two industry groups showing declines in employment over the period: motor vehicle services (down 4,853 or 21.6%) and clubs (down 743 or 31.6%).

MIX OF MALE-FEMALE WORKERS

In 2006-07, there were approximately 14,400 more females (84,400) employed in Western Australia's retail industry than males (70,000). Females accounted for 55% of employed persons and males 45%. Female employment grew 33% (21,000) between 1996-97 and 2006-07, almost three times the rate of male employment (up 12% or 7,000). In 1996-97 the ratio of males to females was virtually 50:50. In the national retail industry, male employment grew 15% (higher than in Western Australia) and female employment rose 27% (lower than in Western Australia). The mix of male and female workers in Australian retail trade was similar to that of Western Australia in both 1996-97 and 2006-07.

EMPLOYED PERSONS IN RETAIL TRADE, By sex - Western Australia

Between 1996-97 and 2006-07, employment growth was strongest in Western Australia's retail industry in the age group 45 and over (up 47% or 12,700), followed by those aged 15-24 (up 21% or 10,800) and 25-44 (up 10% or 4,900). This growth was in line with national increases.

NUMBER OF EMPLOYED PERSONS IN RETAIL TRADE, By age - Western Australia

NUMBER OF FULL TIME AND PART TIME WORKERS, Retail trade - Western Australia

LABOUR PRODUCTIVITY

Labour productivity is measured by the ratio of output (industry total factor income) to labour input (hours worked). Labour productivity in Western Australia's retail industry rose approximately 50% between 1996-97 and 2006-07. This result was lower than the 62% rise in labour productivity in the Australian retail industry. It is important to note that part of the rise in labour productivity is due to 'capital deepening' (an increase in the ratio of capital to labour).

LABOUR PRODUCTIVITY(a), Retail trade

Generally, since 2006, wage price growth in Western Australia's retail trade industry has outpaced growth for the Australian level. From the June quarter 2006 to the December quarter 2007, wage prices in Western Australia's retail trade industry grew by 7.8% (or an average of 1.3% per quarter) compared to 6.4% (or 1.0% per quarter) for the Australian level.

WAGE PRICE INDEX, Total hourly rates of pay excluding bonuses - Retail trade

Between 1996-97 and 2003-04, average weekly earnings, of full-time adult employees in Western Australia's retail industry, were consistently higher than the national average. In 1996-97, average earnings in Western Australia was $535 per week compared to $530 per week across Australia. Western Australia's retail industry earnings rose to $711 per week in 2003-04, while the national average increased to $702 per week. However, after 2003-04, Western Australia's average weekly earnings fell below the Australian average for the retail industry. Between 2004-05 and 2006-07, average weekly retail industry earnings rose from $715 to $769 in Western Australia, compared to the national average increase from $732 to $812.

In overall growth terms, average weekly earnings, of full-time adult employees, in Western Australia's retail industry grew 44% ($234) between 1996-97 and 2006-07, while nationally they grew 53% ($282). Over the three years 2004-05 to 2006-07, however, growth in average weekly earnings in Western Australian retail trade grew by only 8% ($58), half the rate of national earnings in retail trade (up 16% or $109).

AVERAGE WEEKLY EARNINGS, Adult ordinary full time earnings - Retail trade

• Western Australia's strong economic growth over the last 10 years has had a positive impact on retail spending with GSP per capita increasing by 31% from June 1996 to June 2006.
• Increased spending by Western Australian households rose by 52% ($19 billion), or 4% ($2 billion) per year between 1996 and 2006 which was largely directed to the retail industry.
• Increased household spending has also coincided with growth in the use of credit and personal loans. Revolving credit quadrupled to $6.3 billion in Western Australia between 1996-97 and 2006-07. Meanwhile, the value of fixed personal loans for purchasing household goods doubled over the same period (up 97% to $0.2 billion), and rose 20% to $1.4 million for motor vehicles.
• Retail turnover in Western Australia rose by 61% to $24 billion in real terms between 1996-97 and 2006-07, an average of 5% ($900 million) per year.
• The industry groups of food, household goods and hospitality and services accounted for 74% of retail turnover growth between 1996-97 and 2006-07.
• Western Australia accounted for 10% ($34 billion) of the retail industry total income 2005-06, which corresponds to Western Australia's population share (10%).
• Between 2002-03 and 2005-06, Western Australia's retail industry had the largest proportionate increases in business income (up 26.1% or $7 billion) of all states.
• Perth consumers generally paid more for retail commodities than consumers in other state capital cities. In the June quarter 2007, Perth consumers paid the highest average prices across the states for meat; processed fruit and vegetables; and alcoholic drinks.
• Western Australia recorded the second highest growth rate (behind Queensland) in the number of operating businesses between 2003-04 and 2006-07 (4% or 1,100 businesses). Industries recording the largest increases in business numbers were car retailing (28%), clothing retailing (15%) and takeaway food retailing (12%).
• More than half (52%) of operating businesses in Western Australia's retail industry in 2006-07 were small businesses, which was similar to the proportion operating in New South Wales (53%), Victoria (53%) and Queensland (53%).
• The number of small businesses operating in Western Australia grew by 34.0% between 2003-04 and 2006-07, the second highest after Queensland (34.4%).
• Retail trade employs more people in Western Australia than any other industry. In 2006-07 14% (155,000) workers were employed in retail trade.
• Retail industry employment grew by nearly 23% in Western Australia between 1996-97 and 2006-07, higher than the national rise of 21%.
• Females accounted for 55% of workers employed in Western Australia's retail industry. Female employment grew by 33% between 1996-97 and 2006-07.
• The majority of workers in the retail industry were aged between 15 and 24 years (40%) and a further 34% aged between 25 and 44 years.
• There were almost as many part-time workers in Western Australia's retail industry as full-time workers. The average weekly hours worked by full-time workers was 43 hours and 16 hours for part-time workers.
• From the June quarter 2006 to the December quarter 2007, wage prices in Western Australia's retail trade industry grew by 7.8% (or an average of 1.3% per quarter) compared to 6.4% (or 1.0% per quarter) for the Australian level.
• The average weekly earnings of full-time adult employees in Western Australia's retail industry grew 44% between 1996-97 and 2006-07, while nationally they grew 53%.