Computer sellers tip good times to come

A year of strong growth in Australia’s multi-billion dollar computer retail industry is forecast, according to a survey by office equipment finance company RentSmart.

The survey of retailers Australia-wide found an overwhelming level of confidence across the next 12 months with sales, employment and profits all predicted to increase.

Specifically the key expectations for business growth in 1999 are:

l More than three-quarters expect an overall increase in the value of sales during 1999 versus 10 per cent predicting a decline

l 40 per cent expect to expand their workforce. Only 7 per cent believe they may be forced to lay-off staff

l 53 per cent forecast profitability to increase versus 20 per cent who expect a decrease. This decrease may be linked to expected in-creases in expenditure levels on both the wages bill (55 per cent expecting an increase) and capital expenditure (53 per cent expecting an increase)

l An issue on which the retail sector is divided is the expectation for prices charged in 1999. More than a quarter expect an overall decrease in prices charged, as against 40 per cent predicting an increase. More than a third expect no change.

RentSmart managing director Ned Montarello said Australian retailers were entitled to be confident in the face of current trend, specifically with the sale of PCs worth more than $5.6 billion in Australia last year according to the Gartner Group.

“Last year was a bumper year for office technology sales and many analysts are predicting similar growth in 1999 as businesses shorten their upgrade cycle, renewing their technology to counter concerns about the Millennium Bug,” Mr Montarello said.

“As a supplier of finance to this sector, we’re already seeing 1999 come good with a strong climb in sales through our door in the first two months of the year,” he said.

According to Dick Smith managing director Jeff Grover, much of the growth in 1999 will come from small to medium-sized enterprises who are focusing resources on establishing e-commerce infrastructures.

“This sector of the market will be a big driver for retail business this year,” Mr Grover said. “Companies have been watching e-commerce developments over the past 12 to 18 months and we’ll see a lot of them start to commit funds to developing capability during 1999.”

The RentSmart survey supports this view with retailers expecting most of their growth opportunities to come from SMEs with the small office home office (SOHO) market just pipping consumers as the second and third sectors offering most growth potential.

But despite the general optimism, the survey found issues such as the stability of the Asian economy (63 per cent concerned), fluctuating international exchange rates (71 per cent concerned) and the pending GST (35 per cent concerned) were all potential threats to their business.

Falling margins rated as the primary business concern by 85 per cent of respondents.

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