Rain clouds pass over retail

There is little doubt it’s been a drab few weeks for retail across the country.

Our public company woes have been played out by major “discretionary retailers” like DJ’s, announcing very poor end of year sales.

The “tough retailing conditions” message has not been confined to high-end luxury goods, as it’s also being played out across many other public company retailers and small family-run stores around the country. It’s noticeable in car dealerships too.

The retailing conditions are tough because we as shoppers are nervous about everything and anything – rising interest rates, the carbon tax, the introduction of flood levies, falling house prices, rising petrol prices, the falling share market and lowered super contributions. Oh, and the potential of real job cuts because retail is slow and weekly pay rates just went up by 3%!

Our fears are making us save at a rate not seen for three decades. If these fears are not overcome, our behaviour will lead to a true slow down on the Eastern Seaboard.

However, the other part of our big brown country, the bit they dig out of the ground and send to other countries, is still humming along. But it only has about 10% of our population living in it.

This week, trend forecaster Hugh MacKay did a great job of telling shoppers to take out their credit cards and begin to spend again, because we have nothing to fear but fear itself. And he is right.

It may well be frustrating that there are lots of things making us feel “poorer” but in actuality we are doing very well.

Let’s look at assets. While we can’t put away as much super as we once could, we are paying down debt on our houses. That’s the next best thing to super as selling our home is tax free.

Servicing our debt? Well, we’ve been paying it down for the past three years, so our debt is lower. While interest rates may be up, they’ve about peaked out and will now decline for a few years.

Petrol prices are up, but most of us are having around 3% pay increase, and the cost of food, clothing and electronics are definitely lower because of the high Aussie dollar.

So here’s my prediction for the second half of 2011… We will travel overseas, as no matter where you look travel is cheaper than it’s ever been for Aussies – whether it’s in the US, Europe, Asia or next door in New Zealand.

But as we move towards summer, Christmas and the New Year, we will become more familiar with our new costs. We will realise that we have more equity in our homes than last year, not because they’ve risen in value, but because we’ve been paying more repayments than we needed to.

We will finally see a rate drop and start to say: “What do I want to buy that I’ve been putting off?”

The role of retailers, importers and manufacturers over the coming months is to create some outstanding events to showcase great products and experiences that remind us why shopping is good for us.

In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.