DEPARTMENT AND FASHION STORES THE BIGGEST LOSERS IN XMAS TRADE

Australian Bureau of Statistics retail trade data for November 2011 shows shoppers responded to the Reserve Bank of Australia’s December decision to lower the base interest rate to 4.25 per cent by buying recreational goods, hardware, gardening supplies, furniture, cosmetics and groceries for the festive season.

Although consumers felt some respite after banks passed on the rate cut, the Australian Retailers Association (ARA) says the static month-on-month figures were a letdown for retailers expecting an early Christmas boost.

ARA executive director Russell Zimmerman says there were significant declines in the department store (-4 per cent), clothing and footwear (-3.5 per cent) sales.

“(This) is disappointing given these stores are reliant on seasonal spending,” says Zimmerman.

“We know most people leave their Christmas shopping until the last minute, so coupled with December’s interest rate cut this will hopefully mean December trade fared better on the fashion front.”

By comparison, year-on-year sales in household goods were up 2 per cent and food grew 5 per cent, suggesting Christmas feasts and home entertainment were popular choices.

“The year-on-year boost is hopefully a sign of things to come for both the December trading period as well as the New Year as retailers bring in new stock and consumers realise they’re able to splash out on some items,” says Zimmerman.

However, the ARA warns consumers are still vulnerable due to the new school year and need to rebalance household budgets.

“They won’t be able to afford any increases in interest rates or new taxes or charges as federal and state budgets are announced,” says Zimmerman.

“In addition retailers certainly can’t afford to bear the brunt of any more strain on consumer sentiment or regulatory burdens imposed on business – and this would certainly dash any hope of continued growth in early 2012.”