Retail conglomerate Wesfarmers says rising interest rates and inflation are starting to affect consumer behaviour, even though low unemployment and high levels of household savings are supporting demand for now.
The owner of Bunnings, Officeworks and KMart said shopping patterns and customer feedback over recent months indicate some customers are becoming more price sensitive, as they try to manage household budgets.
"We see these conditions as an opportunity for our businesses, which are well known for their everyday low prices, to outperform relative to others in their markets," Managing Director Rob Scott told shareholders at the company's annual general meeting on Thursday.
"Retail trading conditions have remained robust, and we have been pleased with sales through the 2023 financial year-to-date."
Sales at Bunnings have been impacted by an unusually prolonged period of wet weather, he said, but overall growth continues to be supported by strong demand from commercial customers.
Sales growth from DIY customers has moderated from the high levels experienced through COVID, but remains positive.
Officeworks' sales are broadly in line with the prior year, but normalisation in demand for categories impacted by COVID such as office supplies, or print and create services, has been positive for the sales mix.
Mr Scott noted that combined sales growth for the Kmart and Target chains have booked strong trading results for the year-to-date even when adjusted for the impact of lockdowns last year.
However, sales at online marketplace Catch have declined through the year-to-date, with online demand moderating from very high levels recorded during periods of lockdown.
