Australian retailers cut jobs as fuel and supply chain costs surge

Businesses are warning of possible closures.

Australian retailers are cutting jobs and warning of business closures as fuel and supply chain costs surge, prompting urgent calls for government intervention from the Australian Retail Council (ARC).

“Retailers are being hit hard by the sharp increase in costs at the same time as consumer spending is constrained and business confidence is at a record low,” said ARC CEO Chris Rodwell. “The fact that businesses plan to adjust staffing levels and are warning about viability if conditions persist, shows the scale of the challenge ahead for a $444b sector that represents just under one-fifth of the economy,” he said

Cost pressures are already translating into job losses across Australia’s retail sector, with 58% of businesses reporting staff reductions and 11.1% indicating significant cuts to their workforce, whilst none are increasing hiring.

Retailers warned the situation could worsen, with 82.8% saying prolonged disruption would seriously impact profitability and 34.5% cautioning it could threaten their viability or force closure. About 7.8% expect they would shut down within months if conditions persist.

Rising fuel and freight costs are a major driver of the strain, with 90.6% of businesses reporting increased freight expenses—many above 10% and nearly one in five exceeding 25%—whilst 67.2% say higher fuel costs are having a significant impact.

Despite this, more than half of retailers (55.6%) are still absorbing some of the cost increases, although 24.8% expect to pass most or all of these onto consumers.

The outlook continues to deteriorate, with 96.6% of retailers expecting conditions to worsen over the next 12 months and more than half (50.4%) saying supply chain challenges are already having a significant or critical impact.

In response, businesses are calling for urgent government support, with 76.1% backing a temporary reduction in diesel fuel excise, 79.3% supporting stronger action to secure global fuel supply, 72.6% endorsing energy cost relief, 59.8% favouring broader tax relief, and 79.3% urging increased investment in supply chain resilience.

Rodwell said cutting diesel excise is the fastest way to ease pressure on businesses and prevent further job losses.