Consumers switch on to new appliances

Last updated 10:07 10/11/2012
Darren Gittins
100% Appliances in Upper Hutt owner Darren Gittins says he is turning over more stock but at lower margins.

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Consumers were cautious with buying pricey food items and high-end liquor last month, but spent up large on cosmetics, hardware and appliances.

The latest Statistics New Zealand figures for credit card and eftpos transactions showed total spending rose 0.4 per cent last month after falling 0.9 per cent in September.

There was $11 million more spent on fuel, suggesting that lower petrol prices are encouraging people to drive more often after a long period of being careful about usage.

Unleaded 91 fuel was down to about $2.149 a litre from a high of $2.229 in August.

Buying of consumables such as food fell by $9m but the durables category that includes iPads, washing machines, furniture and skincare had a $7m spending injection.

100% Appliances Upper Hutt owner Darren Gittins said that a rise in spending on electronic goods and whiteware was deceptive in terms of economic impact because margins for such products had declined rapidly in recent years.

"We are turning over more but making a lot less money off things we're selling. Our margins are a lot lower because of all the competitiveness from all the Aussie chains coming over here and trying to establish their markets. A lot of them seem to be prepared to run their stores at a loss to maintain market share," Gittins said.

His shop was seeing a rise in sales of tablets, iPads and smart phones which had destroyed the market for laptops, digital cameras, GPS devices and e-readers because they acted as an all-in-one device. Gittins said items were selling for much lower prices now.

"A Blu-Ray player goes for $99 now whereas three years ago it was $399, and the margin is a quarter what it was three years ago. Five years ago an entry level TV was $3000 for 24 inches, with margins in double figures, now it is only $599 with a single-figure margin. We have got to sell 20 times the amount of TVs to make the same profit."

Cosmetics company Lush experienced a rise in spending at its central Wellington shop in the Old Bank Arcade in Lambton Quay. Staffer Jason Hawkins said it was in part due to launching 34 new products such as blackberry-scented bath bombs and popcorn-flavoured lip scrub.

"We were a little bit busier because people get excited about the new product and we are starting to get busier with Christmas coming up although that is more about gifts as opposed to skincare," Hawkins said, adding that products with a lower price point were turning over more rapidly.

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"We have quite a few products that sit on the shelf for quite a while because they are a bit pricey so it's almost surprising when someone wants to buy one. We have been selling a lot of moisturiser because with the change of season I think everyone's skin tends to freak out for a little bit."

The durables category also includes hardware. A worker at Naenae Bunnings said October was a lot busier with people wanting to do more DIY work on their homes now the weather was improving.

The store had also been holding promotions such as a ladies' night, teaching women how to use power tools.



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