Christmas no relief for retail

Christmas no relief for retail

Interest rates and lower consumer confidence largely to blame, say analysts

Industry representatives are claiming Christmas retail sales figures have been hit by lower consumer confidence, a lack of government cash handouts and consecutive rises in interest rates.

According to The Retail Doctor managing director, Brian Walker, a variety of factors prevented shoppers from spending as much as the year before.

“Sales for the Christmas trading period were not great but good,” he said.

“The interest rate movement impacted on retail sales slightly and also not having the cash handout of the Rudd Government that we had in the same period last year was a factor.”

Walker added a range of issues had driven many retailers to offer pre-Christmas sales, which had negatively affected margins.

“We saw the retailers go into pre-Christmas sales, which were a function of carrying too much inventory into the period, a little bit of a case of follow the leader and possibly a little bit of panic. With the amount of inventory retailers went into the season with, and with the amount of cautiousness coming into Christmas and the early discounting, you’d have to say margins will be impacted on.

“I would expect the numbers to be at or slightly under $14 billion for the sales period.”

Australians Retailers Association executive director, Russell Zimmerman, said anecdotal evidence from retailers showed post-Christmas sales were also suffering more than in previous years.

“In relation to Christmas, retailers found it fairly tough. Generally speaking across the board one can say it wasn’t as good as the retailers would really have hoped for,” he said.

“The early part of the sales went well but they tapered off quickly, which is normally not the case. Normally they run through a good couple of weeks after the Boxing Day sales. Now it’s starting to slow off a lot quicker than retailers would’ve hoped for.”

Zimmerman said the two main factors reducing sales were the Global Financial Crisis and continuously increasing interest rate rises.

“We came off a very difficult trading period in the GFC, which has left consumers a little bit wary. There have been some job losses and when they occur in any industry that tends to slow spending down,” he said.

“The second thing is that although interest rates are extremely low, we had three consecutive rises in a row. That will have dampened sales.”

Zimmerman also claimed Australia’s changing demographic was helping to change spending priorities and patterns.

“If you’ve got people coming in from different religions, some of those people won’t celebrate Christmas any longer so will that not change demographics and how people spend their money?” he said. “Maybe retailers need to be smarter and start looking at the celebrations these people have and targeting those.”

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