Tuesday, January 10, 2012

Welcome to 2012 - Confidence in Retail?

On New Year’s Eve $31,000,000 dollars was up for grabs in Gold Lotto’s annual mega draw. The very thought of the sum gets all to wondering what they’d do with the money. Live off the interest? Splurge on exotic sports cars and endless holidays? Invest in a promising venture? Regardless, the confidence gained by the eventual 32 winners would have been sky high. Conversely, in 2009, Australian taxpayers were divided as to how they would spend their $900 stimulus bonus comprising both savers and spenders despite the federal government’s intention to boost the economy through local retail expenditure. The Westpac-Melbourne Institute’s Consumer Sentiment Index at the time reported a measurable increase in confidence and a shift in optimism.

Come 2012 and what now is the sentiment held by Australian consumers and what are their financial resolutions? What will the year hold for retailers who have seen stagnating growth over the last five years? What market conditions will ultimately determine the year ahead in the economy?

Fast facts:
· The current cash interest rate is 4.25% which is the lowest level since April 2010
· 50% of consumers plan to spend less while 45% plan to save more in 2012
· Woolworths remains atop the retailing industry with $35.3 billion in turnover through 2011
· The Australian unemployment rate is relatively low at 5.3% (Greece is 17.5%)
· A strong Australian dollar has seen over 600,000 people taking an overseas trip per month spending an average of around $4000 per trip
· Online shopping is worth an estimated $10b per year in Australia with growth of over 8% per year

Following anticipated economic trends it could be expected that the retail sector could see a return to some normality in 2012 or at least a steadying that might be accepted as the new reality. Woolworths and Coles will remain the all powerful duopolists, online retailing will continue to terrorise bricks and mortar retailers or at least ensure they diversify, Australians would like to pay off more of their debt but would rather go on holidays and retailers who innovate, diversify and adapt to the ever changing retail landscape will find themselves having a happy 2012!

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