Retailers cautious after interest rate rise

By James Wells

SYDNEY: Retailers including Harvey Norman and Retravision remain cautious about the market in future months following today’s quarter percentage point interest rate rise.

The rise, which will add $35 per month to the average $250,000 mortgage, is expected to erode further consumer confidence following petrol prices as high as $1.50 in some areas of Australia.

Harvey Norman general manager – electrical, David Ackery said that the interest rate has come at an unfortunate time after patchy sales last month.

“April was a bit challenging,” Ackery told current.com.au.

“We need to look at the March and April figures together, and looking at that we are happy with our performance,” he said.

“Based on what the suppliers are telling us, we are very cautious going forward. There are more and more requests to forward commit to stock. It appears suppliers are very nervous about inventory levels. It has definitely swung around a lot from five years ago,” Ackery said.

According to Retravision Australia chief executive officer, Keith Perkin, the interest rate rise is likely to provide more strain to recent slow retail sales.

“I think it would be fair to say that I am concerned about the potential knock on effect in a tight retail environment,” Perkin said.

When asked whether the recent increase in oil prices and consequently petrol prices in the month of April has caused any further strain on retail, Perkin said it was too early to tell.

“April had so many holidays, it’s hard to say. It was such a short trading month and we are disappointed with a lack of retail activity in the month of April.

“I haven’t seen any numbers at this stage, anecdotally, but all states are saying it has been a very tough month.”

BSL CEO Guy Houghton said: "It certainly will not assist with the current consumer sentiment in our industry which is a move away from luxury items to essential items only. 

"I note industry comments last week that stated that petrol prices were not having any material negative impact on trade, I am sure the market figures for the month of April will tell a different story," Houghton said.

Retailers including Narta managing director, Kay Spencer, JB Hi Fi CEO Richard Uechtritz and The Good Guys CEO, Andrew Muir, were unavailable for comment.

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