Retailers could struggle in 2012 if spending stays low

Official figures for Australian retail trade in November predict tough times ahead for local retailers.

Seasonally adjusted figures from the Australian Bureau of Statistics show only a 0.03% rise in spending in November, to $20.933 billion, compared to the 0.3% that economists had predicted.

Stronger spending in cafes and restaurants – a sign for many that consumers are not reluctant but rather uninspired by the High Street – was offset by a decline in spending in department stores, according to Michael Blythe of Commonwealth Bank, who also raised the issue of the on-going European concerns.

To Macquarie economist Brian Redican, the customary slash in retail prices during the build-up to Christmas was a bonus for inflation in the last quarter as consumers waited for the effects of the consecutive federal interest rate cuts to make their presence felt.

“It will take quite a while for rate cuts to provide a material boost to retail spending”, he said, suggesting that consumers would currently be concentrating on savings.

There is also the considerable cost of living, with December’s Price Drivers report suggesting that measures needed to be taken to drive down costs and make the Australian retail climate more accessible and competitive.

Are you looking for a way to boost your spending in the face of these pressures? You could consider a 0% purchases credit card, or a card based on interest-free days, which both allow payment to be spread over a longer period with less interest to pay. Alternatively, a low rate credit card could improve on the higher premium rates experienced after introductory periods expire on other cards.

Joe Letts