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Australian clothing retailers face tough times
25
Jul '11
Clothing retail stores in Australia are facing tough times Consumers have still dug their hands deep in to their pockets and are willing to spend only on essential items.

Despite sale posters visible on most of the stores, the month of June attracted a poor response from shoppers. Retailers are worried that if the trend continues, they will have to mark down the goods further.

The last few months have proved to be very bad for the garment and fashion retailers, as shoppers are not lured even by offering massive discounts.

The consumers are spending only as and when, they see value in the products they buy. Consumers are worried over the hike in prices of essential items like food and gas. This has led to a slowdown in discretionary spends.

Delving out reasons behind the situation, experts are of the opinion that, the consumer sentiment index (CSI) has gone down drastically. People are used to CSI cycling in a range of (+/-) 10% but there has been a drop in CSI by around 35% since June 2010.

Huge price changes in utilities, child care, rates, education are crowding out retail, i.e. there is a reduction in private consumption & investment due to excessive government borrowing.

Besides, except for some recent stimulus-induced growth, the housing sector too has been in the doldrums.

There has been a decline in GDP; consumer spending is weak in departmental stores and on food. Spending at department stores fell 3 percent, and consumers spent 0.4 percent less at food retailers.

Consumers are burdened with rising energy prices and living costs although some are gaining by the country's sturdy exchange rate through online shopping.

Building approvals fell 7.9% in May, led by elevated borrowing costs, declining house prices and feeble demand. There has been an increase in foreign and public debt too.

To bring the situation under control they aver that, cost of living should be reduced; government should make provisions to increase activities in housing sector and consumer spending.

The government is giving out associated compensation proposals to compensate the losses of the households. Although it is unclear, whether the policy will be stimulatory, neutral or contradictory.

The experts however, do not see a dramatic improvement until later in 2013 and consider New South Wales and Queensland as bright spots or as upcoming markets.

Fibre2fashion News Desk - India

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