Solid IT sales boosting retailers' Christmas confidence

Thanks to strong IT sales Australia's major retailers ask – what economic crisis?
IT and consumer electronics sales are looking good in the lead-up to Christmas

IT and consumer electronics sales are looking good in the lead-up to Christmas

Australian retailers say IT and consumer electronics sales are strong in the lead-up to Christmas and even exceed last year’s figures, despite the gloomy economic outlook.

Harvey Norman’s general manager for computers and communications, Luke Naish, said the retailer had been pleasantly surprised with customer numbers and sales over the last couple of weeks. They had unexpectedly topped last year’s figures.

“If you had asked me three weeks ago I was battening down the hatches and not very enthusiastic, but to get two strong weekends back-to-back it’s looking like a pretty good time for us,” he told ARN.

According to Naish, Harvey Norman’s computing and consumer electronics department will be the least affected by the current economic downturn thanks to strong sales of sub-$500 products such as MP3 players, digital cameras, mobile phones and gaming consoles – especially Nintendo’s Wii which he claims currently has a “stranglehold” on the console market.

Naish said recent strong sales were in part due to consumers’ realisation prices may soon begin to rise.

“There is still inventory for a small period only which has been bought at a lower price. I think there’s some realisation that prices will begin to increase, particularly next month… we’ve had notice from hardware vendors, in particula,r who are going to have to escalate prices between 23-35 per cent, so it’s going to make January and February interesting months,” he said.

For Harvey Norman, gaming and entertainment has been the standout IT performer, with sales of Wii titles and the Guitar Hero series leading the pack. Mature categories such as multi-function printers, cordless phones and standard faxes are struggling, but Naish said this is no surprise as they are in slow decline anyway.

“By and large, I’m pretty happy,” he said.

Bing Lee general manager, Phil Moujaes, has also seen a turnaround in the last two weeks.

“We’ve seen a pickup in consumer confidence and in traffic in our stores and sales. We’re hoping this will translate into good Christmas trade. We’re quite positive we’ve seen the worst of it and things are picking up,” he said.

IT sales had been extremely strong, Moujaes said, and were likely to be the company’s best performing category in the current tough economic environment. He agreed with Naish that consumers were bringing their purchases forward in anticipation of price hikes.

“It looks like there is more confidence out there. People are paying less for petrol, their mortgage repayments are lower, they are getting the one-off payment from the government, so if you are employed things are looking pretty good,” he said.

According to JB Hi-Fi CEO, Richard Uechtritz, you wouldn’t think there was a financial crisis given the strength of the retailer’s IT sales.

“People are shopping at JB as they were yesterday and yesteryear, so to speak. Our sales are growing in computing and IT – laptops, desktops, netbooks and all the accessories – faster than other categories and we’re very comfortable with where we are. We’re very happy with our November and December year to date,” he said.

City Software founder and managing director, Lorenzo Coppa, said his company’s consumer sales were strong and “substantially” up on last year.

“Web sales up to the end of November, financial year to date, are up 43.7 per cent. Our call centre is slightly up, and consumer spending is really strong. We’re finding that the mid-market has been just a little bit tight – we did feel a bit of a slowdown in October-November” he said.

Coppa said the Federal Government’s recent $10.4 billion stimulus package was probably contributing to consumers’ spending confidence.

“My guess is the consumer market will probably continue on the way it’s been. People aren’t spending money on the big things, cars and houses, but they are feeling like they have a bit more cash in the back pocket, so that might continue,” he said.