SHOPPERS DROPPING

After suffering major declines in sales and profits during the second quarter many retail stores have been forced to retrench staff.

D&B CEO Christine Christian says many retailers have given up hope that customers will spend generously this Christmas.

“Australian consumers are now saving at levels not seen since the 1980s. Retailers, not surprisingly, are experiencing one of their worst years,” she says.

“Retailers cannot count on the usual flurry of Christmas spending to push them over the line, as they might have done in the past. This is a real concern for many businesses as Christmas is such a key time for discretionary spending.”

Retailers have faced rising competition from online sales. Accounting firm Ferrier Hodgson predicts Australia will follow a UK trend, in which online sales increase in share from 2 to 8 per cent of all purchases.

Harvey Norman, Myer and Woolworths have responded by launching online shopping services and lobbying the Federal Government to end tax-free online purchases worth less than $1000.

However, there is continuing pain over the Federal Government’s five-year award modernisation process. By 2015, the penalty rate for Sunday shifts will nearly double, while public holiday penalty rates will jump from a 100 to 150 per cent loading.

Less than 20 per cent of firms plan to seek finance or credit to grow their business in the coming months, according to the D&B survey.

“When businesses shun new credit in this way it is a sure sign they are worried about the future,” says Christian.

Sales expectations fell more than 23 points during the last four quarters to their lowest levels in two years. Expectations are especially weak for durables manufacturing.

Although profit and employment expectations have slightly recovered, they are still more than 20 points below the same levels seen last year.