Jefferies predicts a difficult retail climate to persist for Australian retailers due to the sluggish consumer sentiment negatively impacting discretionary goods demand.

Forecasts suggest independent retailers will likely continue to cede market share, which translates to significant volume windfalls for retail giants Coles (ASX:COL) and Woolworths (ASX:WOW).

Nevertheless, Jefferies indicates that supermarket sales are beginning to balance out as inflation eases.

The brokerage interprets this as a sign that the tailwind from inflation is commencing to dissipate.

With Woolworths, seven of 15 analysts assign a ‘buy’ or higher rating, while five maintain a ‘hold’, and three recommend a ‘sell’.

Their median price target is A$40.20, according to LSEG data.

Conversely, for Coles, three of 15 analysts rate it as ‘buy’ or higher, eight advise to ‘hold’, and four suggest to ‘sell’; their median price target is A$17.08, as per LSEG data.

To date, Woolworths' shares have experienced a 12.2 % increase while Coles' shares have dropped by 7.3%.

Coles (ASX:COL) is a leading Australian retailer, serving millions of customers throughout the country.