Ask An Expert: Retail Sales, Where It’s All Heading?

I’ve noticed an increase in AR Cash Flow taking on Retail clients, including but not limited to shoe distributors and specialty toys.

There has been a lot of talk recently on how Retail sales figures have dropped significantly. I spoke to Mike Holtzer, Executive Director at MBH Consulting Pty Ltd and asked him his opinion on the current state of Retail in Australia and why he believes we are getting an influx of Retail clients.

Why do you think more retailers are choosing Debtor finance or Trade finance as an option for their finance?

One of the main reasons would be, the banks are becoming a lot tougher on retail because of everything in the news, (Big retail giants like David Jones and Myer feeling the heat, with massive drops in sales) which is why you are probably getting an influx of retailers coming to you. In fact a bunch of retailers are due to go into receivership in the next couple of months. The banks are pulling lines of credit or not extending them at all, it’s extremely tough for retailers now.

What’s retail looking like future wise?

I don’t think retail will get better till after Christmas. I think the banks will be waiting to see how retailers perform over Christmas, it’s a good test. Although generally the feeling for Christmas is that it’s not going to be good.

Why have sales dropped across the board so significantly?

Everyone around is a bit scared about the economy, they don’t know what the interest rates are going to do. Plus an increase in sales overseas due to the dollar are hurting Aussie retailers. The discounting in a lot of retailers has remained strong, hurting the bottom line.

Why is it that some retailers are going into receivership yet some are are thriving?

There are some Australian retailers still doing really well like Katmandu, JB Hi Fi and Oroton, I think this is due to a couple of factors, one being having better control over expenses and the other is having a market position that is unique – they will continue to go strong. Take Oroton for example, you can’t go out and get an Oroton bag from anywhere else. Then you look at JB Hi Fi who continues to stay strong due to their competitive pricing and extremely modest advertising. They have a very down and dirty approach and it works.

Well it seems Retail is anyone’s game at the moment with even the big names feeling the pinch. I noticed the other day that even Coles are having a stab at fashion!  Perhaps with its competitive prices and convenient access it might actually engage Aussie shoppers and do well. We’ll have to wait and see!

For more information on how Mike can help turn your Retail business around and create new possibilities, go to their website at http://mbhretail.com