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Double blow hits retail sector hard

THE physiological effect of the September 11 attacks in the US has had a swift impact on WA retail trade.

Taken in isolation, the events of September 11 would have had a dramatic impact on sales. Combined with an election lead-up and you have what Retailer Traders Association manager Brain Reynolds describes as a “double whammy”, which could herald a subdued Christmas for traders.

With retail trade figures out this week, Mr Reynolds said early anecdotal evidence indicated that sales were very sporadic, reflecting the change in consumer sentiment.

“It’s (retail trade) very patchy. I know it is a well used phrase but at the moment it is very relevant,” Mr Reynolds said.

“While consumers have gone out of the market in certain discretionary areas they are continuing to spend in other areas.

“Consumers seem more concerned about giving themselves instant rewards than long term-commitment.”

For example consumers would be happy to go out and buy themselves an expensive bottle of wine, or spend big on entertainment, while holding off purchases such as refrigerators, he said.

“It all relates to people’s sense of security and wellbeing. People are living for today,” Mr Reynolds said.

WA Retailers Association CEO Martin Dempsey expects a dark period for traders in the run through to next year.

“People are going into a bit of a consumer cocoon. It’s looking pretty grim. Its already pretty plain that people aren’t going to go crazy over Christmas this year,” Mr Dempsey said.

“Normally by now we will see lay-by activity start to pick up as people start setting aside for Christmas. That is not happening this year.”

Despite a stable democratic environment, elections also traditionally give retailers tough trading conditions, as people hold of purchases until after the poll.

“Clearly consumer sentiment levels are down. People like to know where things are heading, otherwise they will keep their hands in their pockets,” Mr Dempsey said.

“The good thing from the election point of view is that there is six weeks of trading left following the election leading up to Christmas.”

But he is loath to talk-up Christmas sales.

“I certainly won’t be talking about a record Christmas. It’s going to be fairly subdued in my view,” Mr Dempsey said.

Not accounting for the surprise US attacks and its effect on consumers, retailers who normally order and commit for Christmas six months in advance could be forced to slash prices to unload excess stocks.

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