Reserve bank hikes rates for Christmas

Retail is tough in Australia right now, consumers are reducing discretionary spending and looking for deals on non discretionary spending. We feel this across our counters and we read about it in reports into the state of retail in Australia.

Thanks to the interest rate rise decision by the Reserve Bank yesterday and moves by the banks to pass on, at a premium in the case of the Commonwealth Bank shortly after the Reserve announcement, retail is set for a tougher than expected Christmas.

As I wrote here recently, I have seen signs of a nice kick in every day sales in newsagencies.  Only time will tell if this is short lived.

Until yesterday I was anticipating a better Christmas than 2009 – that was a tough year because of the GFC fall out. Now I am not so sure. It all depends on how consumers react to the interest rates rise over the next few weeks.

I know that some newsagents will be devstated by the rate rise while others will not feel an impact at all.

Newsagents are more challenged in a tough retail environment than many retailers given the percentage of our traditional turnover which is from items over which we have little or no control of the selling price and given the limited control over our stock levels in the same product categories.

Now more than ever, I am focused on products which generate their own traffic, deliver better than average margin and over which I have far more control.

Creating a better Christmas includes better buying, better marketing, better in-store presentation and better selling.