Consumer Electronics retailers believe that a rising dollar and the possibility of a rate rise increase will hurt sales during the peak Xmas buying period. Also contributing to a soft Xmas is a decline in demand for flat panel TVs.Several retailers that ChannelNews has spoken to believe that thousands of Australians will hold back their spending on devices like digital cameras, gaming hardware and software, tablets and iPod accessories in favouring of buying products overseas due to the strong Australian dollar which is tipped to hit parity with the US dollar before Xmas.
“It would be very disappointing for retailers if the Reserve Bank raised interest rates today,” JB Hi-Fi managing director Terry Smart told the Australian newspaper.
“That would dampen consumer spending at a critical time in the lead-up to Christmas.
“We anticipate Christmas to be tough and there’s no doubt that aggressive discounting would continue now and during Christmas.”
During an interview with ChannelNews last week Smart said that categories that will drive sales during the Xmas period will be iPod and iPhone accessories, Tablets, new motion control gaming consoles and notebooks.
Gerry Harvey, the head of Harvey Norman, who is already doing it tough in several markets said many retailers were doing it tough and an increase in rates would encourage shoppers to cut spending.
“But this would not mean the end of the world,” Mr Harvey said.
“I am more worried about the strong Australian dollar, which would create long-term problems for exporters and manufacturers.” He told the Australian.
Harvey is refusing to comment about the mounting losses that his Company is facing in European markets after it was revealed that hi 16 store operations in the Republic of Ireland and Northern Ireland lost $42.6 million last financial year. His Irish operations have not made a profit since 2003.
UBS recently predicted Harvey Norman’s Irish operations would not break even before 2016. By Harvey Norman’s own admission in its latest annual report, a ”drastic improvement in macroeconomic conditions in Ireland is required before the Irish operations can return to a profitable position”.
Target managing director, Launa Inman, said an interest rate rise would dampen consumer sentiment, discretionary shopping and lead to a difficult Christmas.
“Last Christmas was tough enough and we would prefer a more buoyant consumer heading into this year’s critical Christmas trading period,’ Ms Inman said.