By James Wells
SYDNEY: Suppliers in the electrical retail industry expect even less discretionary spending and an increase in discounting following today’s official interest rate rise of one quarter of one per cent and a very poor month of sales in April.
One major supplier, who did not wish to be named, said: “The month of April was an absolute shocker”.
According to Breville general manager – sales, Mike Dealuney, the interest rate rise has been very poorly timed.
“Could it have happened at a worst time?” Delauney asked.
“We’ve got a building industry in a serious decline and fuel prices at all time highs. We’ve also got a government that is talking about our boom in mineral areas and all the good that mining companies are doing, but I question whether anyone understands how much trouble the retail industry is in at the moment,” he said.
“I have not heard about in any new reports on the retail industry. Has anyone taken the time to look at the retail sales figures in Australia?” Delauney asked.
“An interest rate rise generally affects household affordability and makes consumers a little more shrewd in their decision making,” said Fisher & Paykel national marketing manager, Steve Reid.
“There is no doubt however that an interest rate rise, on top of the increasing cost of petrol in this country will result in downward pressure on pricing in the market,” Reid said.
“Families have been hit hard with the ever increasing petrol prices and now finances have to be stretched even further with this morning’s interest rate rise,” said Fujitsu General general manager – marketing and sales, Phil Perham.
“No doubt the new financial climate will intensify the competitive pressures on manufacturers to compete for a more cost conscious market.
“In times of financial restraint, customers tend to make more considered purchases – looking at how much they have to spend on running and maintenance costs,” Perham said.
According to Samsung marketing director, Kurt Jovais, the long term growth is possible, despite the rise in interest rates.
"The Australian market has enjoyed 14 years of uninterrupted growth. We have every faith that the Australian economy will continue to grow through this time, although this may be at a slower rate. We have real confidence in the depth of the market; especially for products that offer real differentiation and high quality at reasonable value. Samsung delivers on these three core product values, and we’re confident that the retail market will remain strong through this time”.
Electrolux Home Products managing director, Trevor Carroll agrees with the other suppliers, that the interest rate increase will see consumers decrease their spending.
“With renewed growth in household credit in recent months the interest rate rise combined with higher petrol prices will negatively impact consumer spending which in turn will reflect in a tightening of the retail market,” Carroll said.
“I expect an already slow residential housing market will continue to decline as a result of higher interest rates.”