Retailers will continue to face challenges over the next year as consumers return to saving their money, a franchising expert says.
Stan Gordon, managing director of Franchised Food Company (FFCo) which owns Cold Rock Ice Creamery, Mr Whippy and Pretzel World, said shoppers had become frugal as a result of the global financial crisis.
His comments came as the Cold Rock franchise network reported flat sales for January.
"Consumers are being more mindful of the products they buy, even using the term 'saving' when questioned in research and retailers must take notice," said Gordon.
"The retail sector experienced a bounce from the Rudd government’s $900 handout but the benefits of that stimulus package have since passed.
"The economy is settling into a slower grind as consumers return to saving their money. I think retailers can expect only modest sales growth throughout 2010, particularly as more rate rises loom."
Gordon said Cold Rock sales had been impacted by several rate rises, recent wet weather across much of the country, unemployment and the government’s 50 per cent tax incentive on capital goods purchased before 31 December 2009.
"While the Australian Bureau of Statistics found the jobless rate fell to 5.5 per cent in December, a much better result than predicted, that was thanks to a rise in part-time jobs," he said.
"Many full-time workers have gone part time and their hours have been cut. People have debts to pay off and jobs to find and that will come at the expense of the retail sector.
"The full recovery of the sector requires a better job market and many of the spending trends of 2009 will continue.
"As the year progresses, we’ll see consumers stepping up their spending but retailers should look to 2011 as the time for a return to decent growth in retail sales."
Gordon said despite the January results several Cold Rock stores had performed well, including a new store in Bendigo, which became the network’s best selling franchise following its October launch.
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