Low wages growth hurting retail sales

THE slump in consumer spending is expected to continue as a major headwind for retailers across the country.

Commonwealth Bank research says weak wages growth is the biggest factor weighing on the retail sector as households devote a greater portion of their wallet to health, utilities and education.

“Consumers have a finite amount of disposable income and even with the assistance of a falling savings rate, record low wages growth has weighed CONSUMERS are attracted to retailers who are quick to answer questions and offer surprise freebies and discounts, research shows.

And using personal data without approval was the quickest way for a retailer to lose a customer, says a survey by commerce software firm SAP Hybris.

The survey of 7000 significantly on the discretionary parts of retail trade,” CBA senior economist Gareth Aird said in a report.

“Soft total retail trade growth is largely down to a lack of spending growth on consumer durables and clothing.”

Mr Aird said demand for clothing and other discretionary goods had been weak for the past two years, as seen in falling department store sales and the collapse of a string of apparel retailers.

Herringbone, Marcs and David Lawrence, Pumpkin Patch, Rhodes and Beckett are among a recent spate of largely shoppers across the AsiaPacific, including 1000 Australians, shows Aussies have the least tolerance for brands that waste time.

Information such as this could help local brands get on the front foot ahead of Amazon’s arrival, SAP Hybris head of business Stuart O’Neill said.

“Value is going to become high-end clothing retailers to have fallen into voluntary administration.

Overseas clothing giant Topshop has revealed its Australian business is struggling, while department store chain Myer has been warning “challenging trading conditions” continue to hurt its sales.

The value of retailers on the ASX have also come under pressure as investors sell down retail stocks after sales warnings and profit downgrades.

Amazon’s impending arrival will also put more pressure on retailers to sacrifice more profits for lower prices. even more important especially with entrants like Amazon into the market,” he said. “They have economies of scale and have the ability to deliver really well and really efficiently.”

The survey found 92 per cent of Australians expected brands to answer their questions within 24 hours, while almost half wanted a

Myer’s shares are at a low of about 86 cents, while JB Hi-Fi and Harvey Norman have suffered selldowns largely linked to the Amazon threat. CBA also warned the effectiveness of lower interest rates was close to being exhausted and only a lift in wages would lead to an increase in retail spending.

However, it said given the amount of slack in the jobs market, an increase in wages growth was not expected in 2017 and as a result, retailers would remain under pressure.

Online retailers are also feeling the pressure.

National Australia Bank response within three hours.

If there is no response within 24 hours, shoppers were likely to not return to that brand, Mr O’Neill said.

Surprise discounts and freebies were a hit — 61 per cent of shoppers said they valued that in a brand. More than three quarters said they would not use a brand again if personal data were used data shows online retail sales fell 0.8 per cent in April compared with a year ago, reversing growth seen in March. NAB estimated consumers to have spent about $22.37 billion in the year to April, which is equivalent to about 7 per cent of spending at traditional bricks and mortar retailers.

Retail trade figures for April will be released by the Australian Bureau of Statistics today and while economists forecast a slight rise after two negative months, the consensus warns that the underlying trend in spending remains weak.

AAP

without their permission.

Shares in several major retailers have come under pressure since Amazon confirmed in April that it will launch its full site in Australia. Investors fear it will take market share and reduce profits of established rivals, in particular consumer electronic retailers like JB Hi-Fi and Harvey Norman.