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Interest rate hold disappointing but not key to retail turnaround, says AGHA
[Wed 08/02/2012 12:22:29]
The Reserve Bank of Australia (RBA) has kept rates on hold at 4.25 per cent despite December sales figures, which reveal a 0.1 per cent drop in turnover.
AGHA CEO David Leek says while a cut would’ve been helpful it is not the cure-all for the pressures facing the sector.
“Obviously any interest rate cut is good news for our industry,” he says. “The more money people have to spend the more likely they are to spend it but it is not a panacea.
“It loosens the belt a little bit… in that people feel a little bit easier that their mortgage interest rates… have declined but it doesn’t solve the problem. It’s only one of a number of things that need to happen in the industry.”
He believes retailer innovation will help the sector to bounce back because consumers are still opening their wallets just not as often.
“It’s not as though people have stopped spending but they’re pretty cautious about the way they do it. They do shop around and they are very acutely aware of price but new and interesting product is always going to be something that drives demand and we think that’s very, very important and we’ve been continuing to promote with our members.
“Obviously the primary need at the moment of the Australian consumer is they want to bag a bargain, they’re looking for the right product at the right price and clearly I think if the RBA ease monetary policy it helps – but it’s not the silver bullet,” he explains.
Reflecting on the weak December sales figures, Leek says he is not surprised given 67 per cent of its retail members indicated they would not be hiring extra staff for the Christmas sales season.
“I think they all saw this coming [and] were pretty skeptical of what the Christmas trading period was going to look like.
“I think what surprised everybody, to be honest with you, was the lack of interest in post Christmas sales. I think that caught a few people by surprise but there was a fair amount of discounting going on pre-Christmas, which [may have] soaked up a lot of that post Christmas demand,” he adds.
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An interest rate cut this week would’ve been good news for our industry but wouldn’t end the retail slump, according to the 
