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Retail Spending Strong For Start Of FY23

Australians are still spending big at retail despite inflationary pressures and rising interest rates.

According to a number of retailers, consumers have continued to spend in the first six weeks of the new financial year.

Although a spending drop-off is expected in 2023, Super Retail Group boss Anthony Heraghty expects low unemployment rate and high levels of household savings to allow for a softer drop off in spending.

“We think it’s going to be a slow downward trajectory,” Heraghty told The Australian Financial Review.

“We’re not seeing any negative movement yet, and you can sort of see that in that first six weeks of our like-for-like performance.”

Super Retail Group yesterday reported record sales for FY22, despite a 20 per cent drop off in profit.

“In terms of the prospects for this summer and this Christmas, we think it’s going to be a similar period to last year,” Heraghty said.

“But then once we get into next calendar year, we are in a state that is more unknowable, and what we’re doing is hoping for the best but, frankly, planning for the worst.”

Vicinity Centres, who yesterday reported a profit of $1.2 billion, after posting a loss of $258 million in FY21, note that shoppers are also spending more money with each visit.

“We have seen shoppers, keen to refresh their wardrobe, indulge in high-value items such as jewellery and luxury goods, as well as return to intensive dining and entertainment activities,” Vicinity CEO Peter Huddle, said.

“We saw a steady improvement in visitation and shoppers continued to spend, on average, 30 per cent more per visit than pre-COVID.”

JB Hi-Fi reported that total sales for July in its Australian stores were 9.7 per cent higher than in July 2021, while The Good Guys were seeing 7.8 per cent more sales this July than last.

CEO Terry Smart noted that tech such as smartphones and computers are no longer seen as discretionary items.

“This, combined with the fact that we do have a younger customer who typically always wants to upgrade to the latest technology.”

The Good Guys also serves a market somewhat sheltered from the inflationary pressures.

“With home appliance offerings we are focused on the replacement market, which is less impacted by economic conditions.”

 



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