Pillow Talk chief executive Heath Goddard warns businesses that put up prices risk going broke
The founder of one of Australia’s biggest bedding retailers says those who put up their prices in a high inflation environment risk going broke.
The founder of one of Australia’s biggest bedding chains says businesses that put up their prices in a high inflation environment risk going broke amid fears the Middle East crisis will financially squeeze retailers this year.
Pillow Talk chief executive Heath Goddard said he had been able to resist increasing prices since the Iran war pushed up fuel costs, with diesel in one major city now selling for more than $3 a litre again.
“I haven’t put a price up for quite a while and that’s because business is tough,” he told The Nightly.
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By continuing you agree to our Terms and Privacy Policy.“I’m a retailer and retail is a very, very instant business — I can’t put prices up.
“I mean, I can go to a restaurant and they can put their prices up and then we don’t go there and the poor bastard goes broke.”
The leader of a business with 70 stores, from Adelaide to Cairns, is expecting his fuel costs to increase by $1.2 million from February to August.
“I’m paying a levy of fuel to help the trucks keep moving my stuff around and obviously everyone else’s,” he said.
“No one’s giving me anything: I’ve just got to pay more taxes or revenue to somewhere to try to keep the bloody trucks that we deal with to move stuff from here to all around the country.”
David Rumbens, a partner with Deloitte Access Economics, said retailers would this year struggle to pass on higher costs on to consumers, as they usually do when inflation is high.
“Retailers also need to be aware that consumers can only take so much,” he said.
Before the Middle East conflict, inflation was already well above the Reserve Bank of Australia’s 2-3 per cent target and has led to three interest rate rises this year.
Consumer spending is now under strain as businesses pay higher costs transport.
“Events over the first half of 2026 mean Australian retailers are facing a simultaneous attack from both flanks — rising costs and weakening demand,” Mr Rumbens said.
“The Middle East conflict is pushing up costs as the prices of key inputs including fuel, energy, plastics and fertiliser rise.
“At the same time, the rising cost of living is once again squeezing household budgets, dampening the outlook for consumer spending.”
In a quarterly report, Deloitte Access Economics forecast the Middle East conflict would add 2 per cent to retail costs, which would lead to a 3.1 per cent increase in retail prices.
Apart from fuel, fertiliser, freight and packaging costs are getting more expensive, also as a result of the war.
A continued blockade in the Strait of Hormuz would also have further flow-on effects for Australian consumers.
“The result being higher input prices and possible shortages of certain goods,” the Deloitte report said.
“This would have knock-on impacts for the outlook for inflation, interest rates and economic growth.”
Should crude oil prices soar to $US150 a barrel during the second half of 2026 — up from $US87 a barrel now — an economic slowdown was predicted to not just hit airlines but also discretionary categories like hotel accommodation and food services where consumers can be easily cut back on spending.
Overall retail turnover growth was expected to slow in 2026 to 1.8 per cent, down from 2.3 per cent in 2025 when the Reserve Bank cut interest rates three times.
Clothing and footwear growth was expected to post even slower growth with new inflation data out this week showing a 6.1 per cent increase in prices in the year to April.
Department stores and online retailers were expected to see no growth in turnover after last year being the fastest growing category.
Average diesel prices in capital cities this week stood at $2.22 a litre, the Australian Competition and Consumer Commission revealed on Friday, but in Melbourne some service stations this week were selling diesel for as much as $3.16 a litre.
The cost of fuel, used to power trucks needed to transport goods, is lower than the $3.22 average at the end of March, before the Federal Government halved excise to 26.3 cents a litre for three months starting April 1.
But it’s higher than the $1.77 average of February 20 before the US and Israel launched airstrikes on Iran.
Treasurer Jim Chalmers has so far expressed no desire to extend the fuel tax relief beyond June 30 when it is due to expire with the overall 32 cent a litre reduction also including the states and territories forgoing GST revenue.
