Furniture wins amid patchy retail

13 August 2009

Retail turnover figures for June released by the Australian Retailers Association (ARA) hint at a comparatively strong recovery for furniture retailers as consumers adjust their spending patterns.The data, released last week, showed furniture retail as one of the few categories in a position to benefit from the current trading climate.

As the only retail category to report an increase in trade at 2.9 percent growth, the household goods sector benefited threefold, with consumers continuing to spend their Government stimulus packages on bigger ticket items; first home owners taking advantage of Government grants and furnishing new homes; and consumers investing in heating for the colder months.

ARA Executive Director Russell Zimmerman said better results had been expected for clothing and soft goods retailing (-7.4%) and department stores (-8.8%) with heavy discounts during the June stocktake sales.

"Interestingly, volume measures for both of these sectors have increased during the June quarter (2.4% and 0.5% respectively) reflecting signs of consumers taking advantage of heavy discounting for most of the June quarter."

Elsewhere in the retail sector a 1.4 percent decrease in retail turnover for June followed three consecutive months of steady growth and reflected the temperamental nature of consumer spending during the current economic climate. Zimmerman said June retail trade (NSW 0.1%, VIC -1.3%, QLD -3.5%, SA -1.5%, WA -1.8%, TAS -2.1%, NT -2.8%, ACT -1.6%) was indicative of the sort of patchy recovery retailers should expect for the next few months.

"Chain volume measures actually increased 1.3 percent for the June quarter due to heavy discounting and strong retail trade growth in April and May. Retail sales growth has been sporadic for most of the year with January, March, April and May showing steady growth but February and June reporting decreases.

"This is a confusing time for consumers, who are adjusting to increased discretionary spend after successive interest rate cuts and government stimulus packages, but who are also wary the tough times are not done and dusted.

"Over the next few months consumers will continue to display these inconsistent spending patterns by loosening the purse strings in some areas and some months but tightening them in others."

Retailers remained optimistic about improved growth in the September quarter, with the mitigating factor for economic recovery being employment, Zimmerman said.

As the peak industry body in the $292 billion retail sector, the ARA promotes the interests of over 5000 independent and national retailers throughout Australia.

 

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