Retailers positive despite negativity

Retailers positive despite negativity

As the Australian dollar slides below the 50 US cents mark, retailers remain resolutely optimistic that the market will continue to grow, despite the slowdown in the economy.

Uncertainty amongst consumers is being balanced by decreasing PC prices, according to retailers, who are reporting relatively buoyant sales for February and March.

"We had a record month in February for our computers," said Ross Whitelaw, general manager of buying group Leading Edge Computers. "I don't think the slowdown in the economy will affect anything. Customers have still got to buy product."

Whitelaw believes the weak dollar will just help Australia's export cause.

"For the most part, prices on PCs are going down rather than up," he said.

But the exchange rate does remain the primary cause for concern in a market that is highly susceptible to the vagaries of the economy.

"The uncertainty of the Australian dollar is affecting everyone. I think people are also waiting for the election to see if it means they will have a few more dollars," said Phil Russell, proprietor of Mega-Link Computer's in Emu Heights, west of Sydney. "I know from personal experience that my kids' computers depend on how well I am doing in business."

Customers are increasingly looking to repair their old PCs, rather than upgrade, he said.

"I sold a lot of new computers in February, for example, but this month customers are bringing in their old computers for repairs instead of upgrades. Just looking at the rubbish that is being brought in to be repaired is a sign of the economy."

With vendors holding inventory after a slow Christmas season, prices are still very competitive. The question retailers are asking now is how long will it last.

"The unknown quantity is the dollar," said Tandy marketing director Robert Hayes.

"We are not facing a recession, but there are a few destabilising factors - the dollar, the GST and the election. They tend to weigh on people's minds before they embark on a major purchasing decision."

Hayes believes the market was holding its own, contrary to many reports.

"I don't think it is as bad as everyone is making it out to be," he said. "Sure the market is soft, but it has definitely not come to a screaming halt.

"Our sales for the month of February finished with modest growth. March is also looking relatively buoyant. We are keeping inventory tight and looking forward to a buoyant final month of the third quarter and fourth quarter this year."

With this in mind, retailers are maintaining a positive outlook.

"If we keep focusing on the positives, I think businesses will find they do better," Whitelaw advised. "Consumers read about doom and gloom and they tend to postpone their purchasing decisions."

After last year's rollercoaster conditions, companies are also reducing operational costs. Apple retailer Next Byte is one company that has cut back on its marketing budget, but has also managed to reach its projected sales targets for this year.

"Business is not the same as it was last year when turnovers skyrocketed in the lead up to the GST," Next Byte director Crawford Giles told ARN. "But we have had 15 per cent annualised growth over last year's sales and we are very confident with that."

The growth has largely been spurred on by Apple's new product offerings.

"The market seems to be continuing to purchase," he said, adding that sales in Apple's new G4 notebooks were particularly strong. "If I could get 200 units today, I would sell them this week," he said.

Photograph: Tandy MD Robert Hayes

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