As of 8 November 2026, Australian retail spending grew 4.9 per cent in the year to September to AUD 39.91 billion, slowing from 5.6 per cent annual growth in August, according to the Australian Retail Council. Food retailing rose 3.3 per cent, almost exactly matching food and non-alcoholic beverage inflation of 3.2 per cent, while department stores and large online retailers managed just 1.7 per cent. In plain terms, grocery baskets are barely growing in volume, and that changes how grocers should trade off stockouts against waste.
Why flat volumes change the availability question
When volume is flat, every unit a shopper cannot find is a unit lost to a competitor rather than deferred to next week. That reverses the usual reflex of cutting inventory to protect margin. It also means the cost of a stockout is no longer just the missed sale, because a shopper who substitutes once may keep substituting, and grocery loyalty is built almost entirely on repeat availability of the same few hundred lines.
The category split hints at where traffic is going. Other retailing, which includes pharmacy and cosmetics, grew 8.1 per cent, and cafes, restaurants and takeaway food grew 7.4 per cent, while food retailing grew barely above its own inflation. Consumer demand is rotating toward small treats and away from the weekly shop, and that market trend changes which lines must never be out of stock. Read as a consumer trend rather than a one-month wobble, it points to a smaller core range carrying most of the basket.
Three trade-offs to reset
Availability targets by line, not by store
A store-level availability target of, say, 97 per cent hides the fact that the misses cluster in the twenty lines that carry the basket. Setting availability floors for destination lines, and looser targets for long-tail lines, keeps the promise where shoppers actually notice it. It also stops store managers from spreading effort evenly across a range where the payoff is anything but even.
Waste budgets tied to markdown discipline
In a flat-volume market, waste is the first number finance attacks. The useful counter is not to over-order but to shorten the markdown cycle: discount earlier and deeper on the lines that will not sell, and keep full availability on the lines that will. Retailers that mark down late end up with both high waste and gaps, because the cabinet is full of the wrong product.
Promotional depth instead of breadth
With sentiment weakening and the central bank cutting its consumption growth forecast to 1.4 per cent, discounting is the easy lever and the expensive one. Narrow, deep promotions on a short list of known traffic drivers protect margin better than wide, shallow discounts across a category, and they are far easier to measure afterwards, because the baseline is not distorted everywhere at once.
Where the pressure lands by category
| Category | Annual spending growth | Availability priority |
|---|---|---|
| Food retailing | 3.3 per cent, against 3.2 per cent food inflation | Protect destination lines; volume growth is close to zero |
| Other retailing, including pharmacy and cosmetics | 8.1 per cent | Keep pace with range extension rather than cutting SKUs |
| Cafes, restaurants and takeaway | 7.4 per cent | Supply frequency matters more than depth of range |
| Department stores and large online retailers | 1.7 per cent | Service level is the differentiator when traffic is flat |
Read as a set, the four categories tell a coherent story: consumers have not stopped spending, they have narrowed where they spend. For a grocery operator the implication is a two-speed range, with a small core held to a very high availability standard and a long tail allowed to breathe. That structure also makes it easier to explain to finance why a stockout in the core is more expensive than a markdown in the tail.
None of this is an argument for ignoring cost. The argument is that in a market where food volume growth is effectively zero, availability is the growth lever that remains, and it is cheaper to hold the right lines in stock than to buy back lost baskets with discount.
What to change this quarter
The discipline that matters is separating price growth from volume growth in every review. Once the two are reported apart, the availability decision stops being an argument about cost and becomes a straightforward calculation about which lines earn the right to never be missing.
FAQ
Why does flat grocery volume matter for availability?
Because a shopper who cannot find a line substitutes rather than waits, so a stockout converts into a competitor's sale instead of a deferred one.
Should waste targets be relaxed?
No, but they should be paired with markdown timing. Cutting orders to hit waste targets is what creates gaps in the core range.
Is discounting the right response to weaker sentiment?
Only in narrow, deep bursts on known traffic drivers. Wide shallow discounts damage margin without moving volume much.
Which categories deserve more shelf attention now?
Pharmacy and cosmetics, and foodservice-adjacent lines, are growing faster than the weekly grocery shop.
