Hardware, car, liquor and supermarket retailers can expect good times ahead, in a year that isn’t looking as bad for retail as it has been made to sound, according to business information analysts IBISWorld.

While there’s plenty of talk about retailers hurting, general manager of IBISWorld Australia, Karen Dobie, says the retail climate has in fact been reasonably positive leading up to 2012-13.

“Spending in January 2012 grew 2.7% compared with January 2011, despite falling business and consumer sentiment,” Dobie says. “In 2011, total retail spending in Australia reached $248.4 billion, representing a 2.4% growth on the previous year. IBISWorld anticipates total retail sales will grow a further 2.8% to $255 billion in 2012 as consumers begin to feel more confident about our economic future and family finances.”

Hardware, driven by the DIY home repairs and renovation trend, is the category forecast to perform the strongest, projected to grow 2.2% by the end of the 2011-2012 financial year and 5.9% in 2012-13 to reach $12.26 billion.

Car retailing followed as the next most positive category, expected to reach $69.93 billion in 2012-2013, a 4.6% increase, while liquor and supermarkets are expected to grow by around 3% each to hit $16.78 and $85.91 billion in sales respectively.

On the other side of the coin, newspaper, book and stationery retailers and department stores will face the greatest challenges. While sales growth for department stores is expected to stay relatively flat to reach $19.44 billion by the end of 2012-2013, newspapers, books and stationery is expected to clock a 2% decline by the end of the current financial year and a mere 0.8% growth in 2012-2013.

Australian retail spending forecasts

While times are looking tough for newspapers and books, Dobie says all is not lost, with the same trends battering the industry also creating opportunities for retailers ready to adapt by offering greater value propositions and new business models, such as online subscription services.

“The fall of major players such as Borders and Angus & Robertson drove revenue down in 2011,” Ms Dobie said. Further erosion of sales and profit margins is expected to come at the hands of the increasing popularity of e-readers and iPads, and the growing reliance on online media and methods of communication.

Competition in the department store category is expected to remain strong from newly entered international retailers, such as Zara, Topshop and Costco, who are performing well with innovative business models. Dobie highlights Zara and Topshop ability to draw out consumer dollars with their promise of lower prices and greater turnover of fashion lines as successful strategies.

Aggressive discounting and higher sales of private label products are expected to be the hallmarks of the liquor and supermarket retailing sector over the next financial year. The luxury sector is also expected to hold up well, with its apparent immunity to the vagaries of the rest of the retail sector and the introduction of more affordable product lines by premium retailers such as Tiffany & Co.