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ARA relieved at RBA rate hold as winter stock goes on sale early

Peak retail industry body the Australian Retailers Association (ARA) welcomed the RBA’s decision not to raise the official cash rate today as retailers across the country are already heavily discounting early in the key winter season.

According to the ARA's Executive Director Richard Evans, the decision by the RBA to put a hold on rates acknowledges that the interest rate rises in 2007 and early 2008 have bitten hard on Australian consumer discretionary spending.

"Australian consumers are doing it tough - and so too are the retailers. Many apparel retailers have reported very poor demand and it is quite apparent that foot traffic is down with winter fashion sales starting as early as next week's Queen's Birthday Weekend.

"Many retailers would prefer to discount slow stock by 20-30% now than suffer 50-60% at the end of the season. It is difficult for retailers to carry over surplus seasonal stock. The cost of storage plus holding costs do not make it a profitable equation to keep stock on hand.

"Today's decision by the RBA shows they have again responded to retailers and consumers and continued to listen to those battling in this economy and allowing the natural market forces to correct it self. The concern we have is that petrol prices are continuing to rise placing more pressure on grocery prices. This is going to further bite into the already tight purse strings of average Australians and put pressure on retailers as discretionary spend declines," Evans said.

"From a social perspective, the cost of essential services will continue to rise and we can already see a change in consumer behaviour. There is increasing evidence of pensioners being caught shoplifting and the use of stolen number plates on cars for ‘drive offs" in petrol stations," 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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