PESTLE: Australia

Political: The Federal Government introduced the first round of individual tax cuts for
the 2019 financial year with further cuts for the 2023 and the 2025 financial
years. The first round was aimed at low to middle income earners with the
future rounds for high income earners. These tax cuts are hoping to
stimulate the economy by increasing retail spending (Khadem).
The Federal Government has provided an extra $100m in federal funding
for farmers and drought affected communities (Barbour and Sullivan,
2019). This could help to increase the food production resulting in lower
prices and therefore increasing discretionary income for retail spending but
also help the rural communities and local businesses.
The NSW State Government has been completing infrastructure projects
across the state including new trams. As these were being completed it
was affecting retailers as less consumers were going to small boutiques
and cafes due to road blocks, new pathways and in general avoiding the
area. Now that some projects have been completed consumers have
greater access to the area for the retailers that managed to stay (Clark,
2019). The current Liberal party tends to be better for business owners
rather than employees as the Labour party wanted to introduce an increase
of 10% to the minimum wage, reverse the cuts to penalty rates and try and
close the gender pay gap (Clark, 2019). These incentives result in
increased costs to the retail industry as such they should understand the
policies coming up to each election.

Economic: Australia’s economic growth has been slow for a decade but wage
stagnation since the global financial crisis and climbing unemployment
have hit young people particularly hard to the point that Australian’s aged
under 35 are spending less on non-essentials including alcohol, clothing,
furnishings and recreation (Giffiths and Wood, 2019). Housing affordability
for first home buyers is also at an all-time low with 83% of Australians
worried about being able to afford their first home (Chau, 2019). These
factors affect the retail industry as consumers have less and are willing to
spend less of their discretionary income on non-essentials. This is also
backed by the fact that the Governments tax cuts that were meant to
stimulate the economy have not been able to show a material boost in
retail sales from the tax refunds, indicating that consumers are preferring to
save rather than spend their refunds (Letts, 2019). In July retail sales fell by
1% showing a gloomy picture of consumer spending and the economy
(Khadem).
The Reserve Bank of Australia cut official interest rates to 0.75% on
Tuesday in order to boost the economy and investments however this
comes at a price of also increasing house prices as it becomes cheaper to
borrow money, which in turn hurts first home buyers but makes current
home owners feel wealthier and therefore are more willing to spend freely
(Holden, 2019). As a result will eventually help retailers but will also hurt
retailers especially those that have a target market of under 35s.

Social: Australian consumers are becoming more ethically minded when

purchasing products. This has been encouraged by Oxfam’s What She
Makes campaign, where they demand big clothing brands to pay the
women who make their clothes a living wage. They have also published a
 tells about the ethical thinking of
the customer. keep in mind
while sourcing materials.
list of retailers and given them a rating about how transparent they are, if
they have made a commitment, if they have published their plans and if
they pay a living wage (“Company Tracker What She Makes”, 2019). This
has already caused some retailers to change but it has also given
consumers a tool to understand the brand they are purchasing from and if
that brand aligns with their values. As a result, retailers will need to be
accountable or they risk losing consumers.
Technological: Some recent technological advancements for the retail sector include:

• Oak Labs is developing technology for example smart fitting rooms

that can help retailers better understand customers’ shopping
experiences.
• Fluent retail is an Australian based company who help physical
stores roll out click and collect and other omnichannel services for
customers.
• me creates portable, pre-fabricated retail spaces that blend online
and offline shopping, this includes self-service checkouts, smart
fitting rooms, fully enable for RFID and analytics.

(“Technology in Retail”, 2019).

Environmental: Climate change is a massive issue for Australians as well as the rest of the
world. Australia is already seeing consequences with drought and the
increase in bush fires as a result, individuals are becoming increasingly
aware of the risks and how the retail industry contributes to climate
change. About 300000 people took part in the recent climate strike around
Australia (Henriques-Gomes, Davidson et.al, 2019). This shows retailers
how many people find this an important issue and as a result they will need
to address the impact they have. Companies such as The Iconic have
started to address the issue by allowing consumers to shop and filter
brands based on whether they use sustainable materials, eco production,
fair production, animal friendly and community engagement, they also have
stated using recyclable packaging for posting their products. This shows a
growing trend that retailers need to face.
The drought is also affecting many farmers and rural communities with
reports of financial distress as a result of being able to spend less in the
local community however it also affects Australia at large as drought brings
a decline in food production which results in an increase in prices meaning
that consumers have less discretionary income to spend on the retail
industry as they are spending more on food (Eslake, 2019).

References:
Australian Competition and Consumer Commission. (2019). Retrieved 6 October 2019,
from https://www.accc.gov.au/
Barbour, L., & Sullivan, K. (2019). Farmers and drought-affected communities to receive an
extra $100m in federal funding. Retrieved 6 October 2019,
from https://www.abc.net.au/news/2019-09-27/extra-money-for-drought-communities-as-dry-
conditions-linger/11553366
Chau, D. (2019). 'Disenfranchised' millennials unlikely to afford property until they hit 30.
Retrieved 6 October 2019, from https://www.abc.net.au/news/2019-09-28/disenfranchised-
millennials-property-ownership-unaffordable/11555420
Clark, G. (2019). How the state and federal election will impact retailers - retailbiz. Retrieved 6
October 2019, from https://www.retailbiz.com.au/latest-news/how-the-state-and-federal-
election-will-impact-retailers/
Company Tracker | What She Makes. (2019). Retrieved 6 October 2019,
from https://whatshemakes.oxfam.org.au/company-tracker/
Eslake, S. (2018). The economic impact of farm drought in rural Australia. Retrieved 6 October
2019, from https://aicd.companydirectors.com.au/membership/company-director-
magazine/2018-back-editions/october/economist-the-big-dry
Griffiths, K., & Wood, D. (2019). We've set a trap for millennials that none of us should be proud
of. Retrieved 6 October 2019, from https://www.abc.net.au/news/2019-08-19/young-
australians-financially-worse-off-than-older-generations/11425428
Henriques-Gomes, L., Davidson, H., Cox, L., Smee, B., & Zhou, N. (2019). Hundreds of
thousands attend school climate strike rallies across Australia. Retrieved 6 October 2019,
from https://www.theguardian.com/environment/2019/sep/20/hundreds-of-thousands-attend-
school-climate-strike-rallies-across-australia
Holden, R. (2019). The RBA's cut to interest rates will boost house prices, but that's not the only
effect. Retrieved 6 October 2019, from https://www.abc.net.au/news/2019-10-04/house-prices-
will-rise-with-lower-interest-rates/11573638
Khadem, N. (2019). Australians reap tax refunds worth $17.4 billion, as RBA signals tax cuts will
boost spending. Retrieved 6 October 2019, from https://www.abc.net.au/news/2019-09-
26/australians-reap-tax-refunds-worth-$17.4-billion/11548186
Letts, S. (2019). Tax refunds and interest rate cuts fail to deliver bump in retail sales. Retrieved 6
October 2019, from https://www.abc.net.au/news/2019-10-04/tax-refunds-interest-rate-cuts-
retail-sales-august-figures/11573688
Technology in Retail. (2019). Retrieved 6 October 2019,
from https://www2.deloitte.com/content/dam/Deloitte/au/Documents/consumer-industrial-
products/deloitte-au-cip-retail-trends-technology-in-retail-240816.pdf

PESTEL IS IMPORTANT IN PROPOSING TO OTHERS HOW BUYING WILL BE AFFECTED.