ARA warns on interest rate increases!
We have for sometime - and asked for a review of the RBA mandate…!
Australian retailers need time to recover – no interest rate rise before February 2010

The Rudd stimulus packages which saved many Australian retailers last Christmas and early 2009 have faded into happy memories.

The RETAiL Alert Group is not totally convinced that the ‘shell’ of ‘to do’ infrastructure works and current low interest rates propping the building industry will be enough to maintain retail sales above inflation and certainly above locked in Shopping Centre annual rent or new rent increases.

The Australian retail sector is a major employer of labour – any interest rate rise before Christmas 2009 would be unhelpful in restoring the health of numerous small retail businesses – huge employers of casual labour.

·         The ARA has correctly warned on any interest rate increases – the whole Australian retail sector should swing behind the ARA on this issue including the Shopping Centre Industry.

What the banks do with background interest rate rises is another story.

The July sales results were somewhat of a surprise to some not to us.

Winter 2009 has been one of the warmest winters on record – July and August has seen high temperatures throughout Australia – those who left there winter clearances too late have taken a sales and profit bath, very little sympathy we warned them.

We predict the major retailers soaking up market share will still show growth – the slack in demand for electronics is still fairly strong – other than retailers such as Country Road clothing and footwear; discretionary gift retailers’, Mmm.

·         Those retailers who have taken notice of our 10 Point Guidance Notes and have clinically tailored an OTB (Open to Buy) matching gross profit KPI returns to each trading fixture will succeed – others who have played around with OTB’s and have not locked gross profit return to from each fixture occupied will struggle.

Those retailers who have not set high sales expectations from their online stores will lose out.

·         The acid test for the RBA should be no change in interest rates while retail sales remain behind inflation and comparative hours worked continue to fall.

To comment on interest rates email Interest Rates Christmas 2009.

Tony Standley
Principal
The RETAiL Alert Group (Australia)
Mobile +61 (0)41 924 0497
e-mail info@adsass.com.au
Fax +61 (0)2 9987 0633
Website http://www.retailalert.com.au
 
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