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ARA: 2009 retail expectations - Sept '09 quarter to herald significant growth

Peak retail industry body the Australian Retailers Association (ARA) is predicting a sluggish start for the retail sector in 2009 but with interest rate cuts to really kick into the economy by March and early April, significant growth will be back in the retail sector from July in the third quarter to September 2009.

ARA Executive Director Richard Evans said with predictions of good trade over the Christmas and post Christmas sales period, there will be the natural seasonal slowdown in February - March but things will start to really gear up in the retail sector from April 2009.

"As Australian retailers move into the first quarter of 2009, trade will slow as seasonally expected. February and March are traditionally the toughest time for retailers as the credit card bills from Christmas arrive, there are back to school costs and cash becomes scarce. But our message to supply chain employers is "don't panic," Evans said.

"Employers must not have a knee jerk reaction to the slower times ahead and should hang onto staff as things are predicted to get a lot better heading towards the end of the financial year. Once we start heading into June - August, with predicted further rate cuts on the horizon and potentially another cash bonus from the Rudd Government, strong consumer confidence will return with more cash flowing through the retail sector.

"The retail sector is the barometer of the economy and when it recovers, other segments will follow three to six months later. Now is the time for the business community to take a little pain and hold their staff and provide loyalty and thus confidence to employees who are the consumer market. The retail sector is the cash hub for the economy with consumer confidence the driver to push cash into retail which will ultimately flow through to the rest of the community. If we start cutting jobs now, the recovery will be much slower and the self fulfilling negative prophecy will prevail," Evans said.

"For over 15 years, the ARA has been publishing retail sales predictions using internal research modelling with consistent accuracy. The ARA was already ringing the alarm bells to the Reserve Bank of Australia (RBA) and key decision makers over a year ago when our indicators were suggesting that consumers were starting to reign in spending in January 2008 as a reaction to the November 2007 rate cut. In fact, when the RBA cut the cash rate again in February and March, the ARA again went public with alarm at the heavy handed nature of the monetary policy decisions

"The ARA predicts 2009 will be 'short term pain with long term gain' for the retail sector - but we shouldn't see the economic rollercoaster of fluctuating interest rates and sky rocketing petrol prices that de-stabilised consumer confidence in 2008," Evans said.

For over 104 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia's $292 billion retail sector which employs over 1.2 million people. As an incorporated employer body under the Workplace Relations Act and with a range of member services including business consulting, policy development, advocacy and education, the ARA promotes and protects over 5000 independent and national retailers throughout Australia. Visit www.retail.org.au or call 1300 368 041.

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