THE Myer boss, Bernie Brookes, has described the nation’s retail sector as a ”tale of woe”, with its growth rate to remain below 3 per cent for the next few years as consumers fret over rising energy prices, steeper healthcare and education costs and the carbon tax.
The chief executive of the nation’s biggest department store also warned that higher penalty rates and the current industrial relations framework would lead to many shops shedding staff and reducing their trading hours and that this could result in the closure of shopping centres.
Mr Brookes said the pain was being felt across the discretionary retail industry and that he feared more companies would collapse following a string of failures over the last two years.
”What we are seeing in retail is really a tale of woe, we are seeing the most difficult time I have encountered in nearly 36 years that I have been involved in retail, I have not seen it as difficult, as consistently difficult, than what it is today,” Mr Brookes said.
While the strong Australian dollar was a boon for shoppers as they surfed the web for better deals offshore, as well as for importers who buy stock overseas, a weakening of the currency could actually trigger a new round of corporate collapses.
”There is no doubt a lot of stores are hanging on, they have got high levels of inventory and are hanging on despite the high level of the Australian dollar being generous to them in their buying prices,” Mr Brookes said.
”If we see the Australian dollar come off, a lot of those buying prices are going to come down, going to be more expensive for them [shops] to purchase the product, and therefore we could see quite a few more stores go into significant issues.”
Asked about future growth rates he remained sceptical that the discretionary retail sector could manage to squeeze out even 3 per cent growth in the short term.
”I think if the discretionary retail sector grew by 3 per cent it would be a fantastic opportunity to get back into some of the metabolism of good growth and good profitability and, more importantly, good prices for the consumer. I don’t see 3 per cent growth in discretionary retail in the next year and perhaps the year on. This is a tough market and it isn’t going to improve overnight.”
Myer has already trimmed its forecasts, warning its full-year profit would be up to 15 per cent below last year’s performance, while rival David Jones has also warned of drooping sales and profitability this year.
Mr Brookes said data flowing from the company’s 4.1 million Myer one club card members showed they were worried about higher energy prices as well as rising costs for healthcare and education, and were reducing their spending. The carbon tax was also constraining expenditure.
He said the Fair Work Act meant stores would be forced to close early and cut jobs because of the large penalty rates that had to be paid to staff.
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