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No miracles this Christmas, says ARA

December 8, 2010: The Australian Bureau of Statistics (ABS) and the peak retailers’ association have confirmed anecdotal reports of soft retail trading over the past few months, with a 1.1 per cent drop in Australian retail turnover in October 2010.

An Australian Retailers Association survey has tipped sluggish trading will prompt retailers to discount in December.

In its latest ABS retail trade statistics, issued late last week, the largest fall for the month was recorded in cafes, restaurants and takeaway food services (-4.8 per cent), which had already dropped to –0.4 per cent in September.

This was followed by clothing, footwear and personal accessory retailing at -4.6 per cent, other retailing at -0.2 per cent and department stores at -1.1 per cent.

Meanwhile, turnover rose in food retailing (0.6 per cent) and household goods retailing (0.5 per cent).

The Northern Territory was the worst performing region, falling almost 5 percent.

Trend turnover flatlined following a rise of 0.1 per cent in September and 0.2 per cent in August. 2010. In the twelve months to October 2010 trend turnover rose 2.8 per cent.

The Australian Retailers Association (ARA) executive director Russell Zimmerman said retailers are concerned the 1.1 percent slump in October trade will be followed by even weaker trade in November on the back of the November interest rate rise.

‘With more than 82 percent of consumers finalising their Christmas shopping in December, consumers are already showing signs they are watching their pennies this festive season with almost 33 percent saying they are planning on spending less this year than last Christmas,’ Zimmerman said.

He welcomed the Reserve Bank’s decision to hold the cash rate at 4.75 percent after almost one third of consumers said they were planning to cut back on the amount they spend on Christmas presents this year.

‘Price sensitivity among consumers is also showing with up to 70 percent of survey respondents saying price reductions would make them shop more in the lead up to Christmas.

‘Christmas is the “Grand Final” of retail trade with some stores taking in up to 40 percent of their yearly turnover from mid November to Christmas Eve, so there would be relief that rates are on hold at this important time of year,’ Zimmerman said.

The ARA said after a year of tough trade retailers it has surveyed weren’t expecting any miracles this Christmas with moderate year-on-year growth of 3.5 percent, totalling $39.9 billion projected in retail sales from mid-November to 24 December 2010.

Zimmerman said retailers were already offering generous pre-Christmas sales rather than waiting until Boxing Day in a bid to get consumers spending and bump up the expected $39.9 billion (up from $38.5 billion last year) .

He said that 63 percent of retailers surveyed intended to offer consumers sales before Christmas, including discounts of up to 30 percent off, two-for-one deals and complimentary gifts with purchases.

In photography. BigW and Harvey Norman have topped those discount levels recently, offering discounts of 40 and even 50 percent in the past weeks on photo books and other gifting products, in addition to their loss-leading pricing for 6×4-inch prints.

‘Retailers are usually optimistic in the lead up to Christmas but this year their spirits have been dampened with over 60 percent of retailers expecting trade over the Christmas period to be lower than last year.

‘This year has been tough for retailers with consumers still suffering from a post-GFC hangover and being very careful about opening their purses and spending on particular items especially clothing, footwear and bigger ticket household items, he said.

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