The 0.7 per cent increase in the December 2008 quarter’s retail turnover is positive news for retailers who have reserved confidence of improved consumer sentiment.

The Australian Retailers Association (ARA) executive director Richard Evans said retail trade growth for the December quarter (NSW -0.6 per cent, Vic 1.0 per cent, Qld 1.0  per cent, SA 1.5 per cent, WA 0.8 per cent, Tas 2.0 per cent, NT 3.4 per cent, ACT -0.1 per cent) was impacted by a number of positive economic indicators.

“There was a lot happening in the retail sector during the December 08 quarter. Retailers were relying on heavy discounting to move stock, petrol prices began to spiral downwards, and the Rudd Government’s first economic stimulus package landed in bank accounts in December,” said Evans.

All of these positive economic conditions had an effect on consumer spend and returned consumer confidence during the past quarter. Consumers have defied negative rhetoric and panic commentary surrounding the global financial crisis and responsibly injected funds into the economy.

“The key to returned consumer confidence in 2009 is job security. We’re calling on all employers throughout all supply channels to hold onto their staff to ensure consumers have the confidence to get cash flowing through the economy,” said Evans.

Evans said the sector feeling most of the benefit was food retailing (1.8 per cent), followed by other retailing (1.3 per cent) and department stores (0.3 per cent). Clothing and soft good retailing was up by (-0.2 per cent) and household goods (-0.7 per cent) benefited from significant post-Christmas sales outside of the survey period.
“The March quarter is always the toughest for retailers as credit card bills from Christmas roll in and back to school costs reign in consumer discretionary spend, but retailers are hopeful improved growth will return to the sector by the September quarter. 

“The retail sector is the barometer of the economy and when it recovers (anticipated from the September quarter), other segments will follow three to six months later. Now is the time for the business community to show leadership and hold onto their staff, providing confidence to their employees who are the consumer market with the key to economic recovery in their wallets,” he said. 

Since October, the Australian National Retailers Association (ANRA) has been tracking consumer opinion and the latest consumer sentiment surveys show that consumers are still planning to use their cash bonus conservatively.

“Almost half of the Australians surveyed in February are telling us they’ll save or use this next cash bonus to reduce debt," said ANRA CEO Margy Osmond.

“Just over 50 per cent of respondents receiving the second bonus said they’d spend it on living expenses and non-essential items such as clothes and white goods.”

Since the second half of December, consumers have become more willing to spend their bonus.

Falling interest rates have encouraged some people to switch from paying off the mortgage to discretionary spending. However, many consumers are still cautious and worried about the jobs market.

The largest single group of respondents (23 per cent) intend to pay down personal debt. Another 16.6 per cent intend to save the bonus. Altogether 48 per cent of respondents intend to save or pay down debt.

“The big unknown at the moment is the extent to which people have kept spending post-Christmas.

That will be made clearer when the January retail figures are released next month,” said Osmond.