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Economics

Xmas shopping > Are you waiting until Saturday?

Are you one of the 1.4% of people waiting until Christmas Eve to do your present shopping?

A survey by the Australian National Retailers Association shows some people are waiting until the very last minute to do their shopping, and given Christmas Eve falls on a Saturday this year, it’s hoping shoppers will come out in full force and spend hard.

But for the retail sector to see a healthy turnaround, it will need to see more than just one day’s good trade.

Late last week, electronics store JB Hi-Fi issued a profit downgrade. Despite heavy discounting, it’s margins are being squeezed.

Today, surf wear retailer Billabong warned that it’s expecting a 25 per cent fall in first half earnings. It says the European economic crisis is impacting sentiment and a cooler than normal start to the Australian summer are keeping shoppers away from it’s summer range.

But market reaction has been quite severe. Billabong shares were murdered today, down 44 per cent. It closed at $2.03, a long way down from the $9.07 it was at in February.

That warning brought down shares in the rest of the sector today, David Jones and Harvey Norman slumped 9 per cent, while JB Hi-Fi declined a further 7 per cent.

What I find interesting is that some of Australia’s biggest department store bosses, say they’re holding out some of the big discounts for their post-Christmas sales, in an attempt to boost the number of people walking through their doors.

The sales last year were disappointing because heavy discounting by the likes of David Jones and Myer, were ongoing throughout the year. It seemed like there was a sale every day.

It will be interesting to see if this strategy pays off, especially if this horrid wet weather we’ve been enduring, in Sydney continues.

But even if the new year sales are a success, shoppers will have to continue spending in 2012.

That may depend on whether we see continued interest rate cuts and whether Australian consumers were smart enough not to eat up all of their credit.

Retailers will also need to change their strategies, to effectively manage a rush of Aussies heading online for their purchases also.

MEMO>ricardo

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