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'Sales frenzy': Australian retailers crank up discounts as consumer confidence falls – The Guardian

Shoppers reluctant to part with their hard-earned money in the face of flatlining wages and record debt, surveys show

Retailers are offering some ‘unusually big’ discounts ahead of the end of financial year sales, industry watchers say. Photograph: Dean Lewins/AAP

Australian retailers have cranked up discount offers into “overdrive” ahead of the end of financial year sales as falling consumer confidence continues to dog the sector.

Two closely followed surveys published on Wednesday by leading banks both pointed to a growing reluctance among shoppers to part with their hard-earned money in the face of flatlining wage growth, falling house prices and record household debt accumulated in the boom years.

Mia Steiber, shopping expert at Finder.com, a price comparison site that offers hundreds of discount deals from leading brands, said retailers have gone into a “sales frenzy” for the winter season and that some of the discounts are “unusually big”.

Among the top discounters is the fashion website The Iconic, which is promoting 60% off 35,000 items, while the sports chain Rebel is offering 50% off men and women’s shoes and 30% off all clothing. In the department store segment, David Jones is offering 50% off homewares and bedding.

The offers do not stop at fashion, however, with car dealers advertising substantial discounts on new models.

Holden dealers, for example, are offering a new Trax LS SUV for $24,500, representing a saving of up to $5,000 in some states and including three years’ worth of free scheduled servicing, according to whichcar.com.au.

Steiber said recent trends showed that Australians did not like to shop if items were not on sale.

“We as shoppers have been programmed to know that if something isn’t on sale, it will be soon enough – particularly in times of economic uncertainty,” she said.

“Some people complain about ‘sales fatigue’, but the reality is when retailers stop offering discounts, customers stop buying. We saw a lull in early 2018 in sales and the drop in purchases was astounding.”

Jonathan Brown, spokesperson for the consumer website Choice, said that marketing by retailers had gone into “overdrive” in order to boost the bottom line.

“Retailers are trying to fill the year with lots of different sales events, but we have to remember that it’s all about clearing their shelves and warehouses and shoring up their finances.”

He said that many Australians were feeling the pinch because of rising energy and healthcare costs.

“Many Australians are feeling financially stretched by the impact of rising health insurance costs. We found three in five Australians are worried about their level of disposable income and the rising cost of health and essential services seems to be playing a part, leaving less room for retail purchases.”

The sales rush comes after the Reserve Bank was forced to cut interest rates last week in response to sluggish economic growth and the threat of a downturn not seen in Australia for nearly three decades.

Despite the cut in the cash rate to 1.25%, the lowest on record, consumer confidence fell over the weekend, according to the ANZ-Roy Morgan index. It declined by 2% from the previous week in the second consecutive decrease, with respondents’ perception of the country’s current economic conditions slumping 7.8%.

The Westpac-Melbourne Institute consumer sentiment index dipped 0.6% to 100.7 in June from 101.3 in May, the bank said on Wednesday. The bank described the result as “disappointing”.

The surveys came after figures last week showed that retail sales fell 0.1% in April, compared with growth of 0.2% predicted by economists. Spending on household goods fell by 0.9%, suggesting that falling house prices were subduing shoppers’ appetite for bigger ticket items. People also spent less on eating out and takeaway meals, while clothing, footwear and personal accessory retailing dropped by 1.2% for the month.

Russell Zimmerman, the executive director of the Australian Retailers Association, said the lead-up to the federal election had seen a big slowdown in retail traffic and a lack of confidence among consumers.

“Retailers are very aware that they need to get dollars through the tills and they have reacted with big discounts over the Queen’s birthday weekend,” he said.

Retailers were increasingly trying to use social media to engage shoppers in different ways, as reflected in Wesfarmers’ decision to pay $230m for the online retailers Catch Group on Wednesday. The Perth-based owner of Coles and Bunnings said it would use insights from Catch’s technology platform and data capabilities to boost Wesfarmers’ other retail operations.

Zimmerman said: “Retailers are trying to build confidence in consumers but that confidence extends from government. Now that the government has been re-elected it is their job to ensure there is plenty of work, so it’s about infrastructure, infrastructure, infrastructure to get the country moving.”

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