No Christmas magic for Oz retailers

Last updated 05:00 28/12/2012

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There has been no Christmas miracle for Australia's embattled retail sector, with the traditional shopping season doing little to shift downbeat forecasts for the year ahead.

Retailers reported good, but not great, Christmas sales as thrifty consumers looked for bargains online and in shops.

"I think it's going to continue to be gloomy for at least the first half of the year," said Margy Osmond, chief executive of the body representing big retailers, the Australian National Retailers Association.

"I think we're going to see more impact in the discretionary spend areas from online.

"I hate to say it, but I think we're going to see some more reasonably high-profile failures."

She said sales growth in the Christmas period would "probably sit at around 4 per cent".

"While that sounds okay, it's not really, because decent growth is six per cent and we haven't seen that for a very long time," she said.

According to the association's yearly survey of shoppers in the lead-up to the Christmas rush, 59.4 per cent planned to pay with cash. This is up from 58.7 per cent last year.

"It all fits the mindset of a very conservative consumer - that they're not interested in a huge amount of debt," Osmond said.

Russell Zimmerman, executive director of the Australian Retailers Association, which represents smaller retailers, said solid trade during Boxing Day sales did not represent a reversal of the weak consumer confidence that had plagued Australian retailers this year.

"I think it's more about the fact that they've got an opportunity to get goods at very discounted prices and... I don't know that the confidence has returned yet," Zimmerman said.

"Someone said to me in the lead-in that they've had a good Christmas, but not a great Christmas. I think that sums it up. I think that's how we are going to go into next year, remembering that at some stage next year we are going to have an election, and elections always slow retail down."

Department store Myer reported record sales of gift cards this year and, Osmond said, booming sales of gift cards reflected the conservative mood of consumers.

"What a gift card is perceived as is the ultimate in value because, whatever you pay for it when you buy it, it will be worth more than that in post-Christmas sales," she said.

"So it completely fits the mindset that says cash, that says I'm a bit concerned about the world at large."

Many retailers used their online shops to move Boxing Day sales forward, with some starting to discount as early as Christmas Eve.

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Osmond said retailers were reporting a "huge" Christmas online.

"I think what you're seeing now is that the biggest online operators in the country are what were the traditional bricks-and-mortar stores, who don't view that as a sufficient offering to their customers any more."

She said the change was driven by customer demand.

"That's why you've seen so much change in the last 12 months, and I think you'd be looking at significantly more investment in this over the next 12 months."

Linda Burgess, manager of Highpoint shopping centre in Maribyrnong, Victoria, said customer numbers indicated people still held out for in-store sales.

"It's that instant gratification that customers get on a day like [Boxing Day], which you can't get online," she said.

The National Australia Bank said it registered more than 3.8 million ATM, EFTPOS, debit and credit card transactions on Boxing Day, at a peak rate of about 100 a second. The spike is an increase from NAB transactions over the past year, which grew at a rate of 15 per cent.

But an NAB spokesman said the year-on-year growth could also be a reflection of the increasing use of cards over cash for shoppers.

Meanwhile, US holiday retail sales this year have grown at the weakest pace since 2008, when the country was in a deep recession.

In 2012, the shopping season was disrupted by bad weather and consumers' rising uncertainty about the economy.

A report that tracks spending on popular holiday goods, the MasterCard Advisors SpendingPulse, said that sales in the two months before Christmas increased 0.7 per cent, compared with last year.

Many analysts had expected holiday sales to grow 3 to 4 per cent.

In 2008, sales declined by between 2 per cent and 4 per cent as the financial crisis that crested that fall dragged the economy into recession.

A 4 per cent increase is considered a healthy season.

Shoppers were buffeted this year by a string of events that made them less likely to spend - superstorm Sandy and other bad weather, the distraction of the presidential election and grief about the massacre of schoolchildren in Newtown.

The numbers also show how Washington's current budget impasse is trickling down to Main Street and unsettling consumers.

- The Age

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