Brambles’ latest research suggests retail environment may be improving

Global pallet pooling solutions company Brambles (ASX: BXB) has a unique insight into the demand for consumable  goods thanks to the integral part its CHEP pallets play in many supply chains throughout Australia and the world. With clients including Procter & Gamble, Kellogg’s and Kraft, CHEP handles some of the world’s most popular fast moving consumer goods.

Each quarter, Brambles pallet business CHEP, in conjunction with the Australian Food and Grocery Council (AFGC), compiles the AFGC CHEP Retail Index, an economic indicator based on CHEP Australia pallet movements. The AFGC is Australia’s peak representative of the food, beverage and grocery manufacturing industry, representing over $110 billion in sales.

According to Deloitte Analytics, which analyses the data on behalf of the AFGC and CHEP, the index “has shown a significant correlation with the retail trade figure three months ahead.”

The latest quarterly results data shows that the declining growth trend in retail sales continued through the June quarter; importantly the Index “predicts the rate of year-on-year growth will increase in the coming September quarter.” According to the Index, after retail trade growth of 2.6% in the June quarter, growth should pick up to 2.8% during the September quarter.

The results of the index suggest things are getting better rather than worse. That’s good news for consumer discretionary retailers such as The Reject Shop (ASX: TRS) through to food and grocery retailers and manufacturers such as Metcash (ASX: MTS) and Coca-Cola Amatil (ASX: CCL).

Foolish takeaway

Not all retailers appear to be benefiting equally from the improved outlook. Clothing retailers and department stores continue to be under stress, while household goods, food and grocery appear to be improving.

With those factors in mind investors may choose to focus their attention on the retail sectors that appear to be best placed to grow, but on the other hand there may be better value to be found in the poorest performing sectors of clothing retailers and department stores.

Interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked…

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of The Motley Fool’s Top 3 Blue Chip Stocks for 2019.

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in a specially prepared FREE report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

See the 3 blue chip stocks

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.