Australian retailers praying for last-minute Christmas rush

Australian retailers were hoping for an 11th-hour Christmas rush yesterday, after a series of rate hikes have forced shoppers to tighten their belts at the most important time of year for stores.

Crowds were thin across major shopping districts and store windows were plastered with sale signs offering discounts as high as 90 per cent as traders limped into the all-important final shopping day before Christmas.

“I’ve been in retail five years and I’ve never seen business this slow,” one assistant at Sydney’s central Myer department store told AFP, estimating traffic at about one-third that experienced in the days ahead of last Christmas.

“Even in the GFC (global financial crisis) people were spending their stimulus cash (from the government).”

Recession-beating Australia is in robust economic health but with the central bank trying to keep inflation in check by raising rates consumers are beginning to feel the pinch, bringing little joy for the country’s shops.

More than 65 per cent of traders were faring worse than last Christmas, said the Australian Retailers Association chief Russell Zimmermann – grim news in a period when the industry makes 40 per cent of annual profits.

“By all accounts this hasn’t been a very joyous Christmas for retailers who are slashing prices pre-Christmas just to get consumers in the door,” Mr Zimmerman said, describing it as a trend “defying tradition”.

Many of Sydney’s clothing stores had kicked off their traditional New Year sales early, offering price cuts of 40 to 50 per cent in a bid to lure customers.

Myer, Australia’s largest de-partment store, was offering discounts on all six floors as it began a 36-hour trading marathon through Thursday night, including free toys and credits for the January sale period.

Rate hikes were the chief cause of consumers’ caution, with a 25-point increase in November bringing the official rate to 4.75 per cent, ramping up pain for mortgage-holders, Mr Zimmermann said.

November’s rise was the latest after six between October 2009 and May.

The Australian dollar’s persistent strength at around parity with the greenback was also hurting retailers, driving bargain-hunters to shop offshore in US dollars online and dodge the 10 per cent goods and services tax.

Legal consultant Ashley Young said she bought most of her gifts online in October, when the Aussie first went through the roof, saving hundreds of dollars “even with postage” on DVDs, books and clothing.

The booming dollar also meant international travel was “super affordable”, she added, leaving her on a strict budget ahead of a January trip to United States.

Mr Zimmermann said unseasonably cold and wet weather in some parts of the country had also dampened demand for traditionally popular summer clothing and other seasonal items, said Mr Zimmermann, capping off an “extremely tough year”.

“Traditionally consumers do leave their shopping until the last minute so retailers have all their fingers and toes crossed that shoppers will be rushing to the tills and taking advantage of extended trading hours,” he said.