Shoppers wary as uncertainty rules

Jeff Whalley
September 03, 2012
Herald Sun

THE spending drought afflicting Victoria’s retail sector worsened in the past six months, just as the rest of the nation’s shopkeepers started tracking “outstanding” growth.

Figures for the half year to June show that as the rest of Australia loosened its purse strings, Victorians were still refusing to spend.

Experts say this was driven by the state’s increased unemployment, plunging house prices and a slowing economy. In the year to June, spending in Victoria sank from about 3 per cent to 1 per cent.

And the global consultancy which crunched the data, Deloitte Access Economics, is projecting another year of little or no growth in retail spending in Victoria.

“In sharp contrast to the national result, real retail sales in Victoria fell slightly in the June quarter,” the report says.

“Underlying economic drivers for the state have weakened considerably of late.

“The state’s large manufacturing sector continues to struggle with the strength of the Australian dollar, while housing construction and growth in international student numbers are no longer driving growth as they once were.”

But in a silver lining for long-suffering Victorian shopkeepers, Deloitte projects a rebound sometime next year.

It also predicts retail spending in the state will surge almost 4 per cent within two years. The Deloitte research shows the rest of the nation is spending again.

The national figure shows an overall boost of 2.8 per cent in spending, outpacing the annual rate of growth seen in the past two years.

The resource-laden states continue to be the best performers with Western Australia tracking almost 10 per cent growth and Queensland up almost 6 per cent.

The loosening of the purse strings is helping the big department stores and clothing retailers the most. In the past six months department stores have had a 5.5 per cent real gain and clothing retailers have had a 6.1 per cent real gain.

Key department stores Myer and David Jones have had the worst of the big decline in the nation’s spending patterns since the global financial crisis, as householders save cash and pay off debt in record numbers.

Deloitte says the spending burst across other states is being powered by real wage growth, interest rate cuts and the Federal Government’s $2.85 billion handouts to compensate for the carbon tax.

Its quarterly retail forecast breaks down sales trends and consumer spending patterns to offer one of the clearest pictures of household spending in the nation.

But the report warns the burst in spending is “fragile” and could break down quickly if anything rattles consumers who still fear a collapse of the Australian economy and their job security.

“Consumer sentiment remains well entrenched in pessimist territory,” it says.

“It seems that while Australian consumers are out there shopping, they are not that happy about it.”