Gloom, talk of doom, in the retail trade

Press, 3 September 1977, Page 1

Gloom, talk of doom, in the retail trade

By

FELICITY PRICE

Urban retailers of footwear. apparel, furniture, appliances, and hardware are not very happy. Neither are the manufacturers

supplying them. Sales of these fell considerably in June compared with May and, although all except household appliances showed an increase over June last year, the rate of inflation would more than cancel this margin. The situation is reflected in the number of sales being held — almost everv clothing and footwear store has had or is having a sale of goods that is not necessarily an annual winter one. In fact, some of the goods in such sales are not even seasonal. Manufacturers of these items are also facing harder times, through decreased demand, as well as liquidity problems from slower ' payment of accounts. Inflation so far this year would suggest an annual

rate of 14.8 per cent. All furniture, apparel, footwear, hardware, household appliance, and general department retailers showed a profit for the June quarter this year behind this rate — some quite considerably behind.

A spokesman for the Canterbury and Westland Retailers’ Association said: “Anyone not making 15 per cent more profit than last year is not making headway; anyone behind that will be sorely placed." Only grocery shops and dairies showed above 15 per cent for the quarter. Mr T. A. Gide, the retailers’ spokesman on household appliances, believes that the tightened retailing will cause sharply increased competition between businesses, the weaker ones 'ailing. "Profitability has been hit dramatically for retailers of appliances.” he said. "Selling and servicing costs have increased up to 22 per cent, while stock values of appliances are up 15 to 20 per cent.”

Some appliance retailers might decide it was not rewarding enough to stay in business.

The fall in appliance sales was disastrous for the trade, because of the high value of stock, much

of w'hich had been bought in expectation of continued high demand, Mr Gide said. “The profit for the apparel industry in June, compared with June last year — only 8 per cent — is very low,” he said. “I estimated that for the apparel market to keep up with inflation, the gross turnover for June would have had to be 536.89 M — so at S34M it did not even stand still.” Mr Gide has noticed that the situation is not so bad in smaller towns and rural areas. “Sales seem to be much better in towns such as Timaru, Oamaru, Blenheim, and Invercargill

than in the main centres,” he said. "Spending seems to have shifted from the city to the country.” In the fashion industry, Mr Gide said, men's wear sales had fallen considerably. "This indicated

that Dad is prepared to go without.” This trend is also evident in the footwear industry, where men’s shoes are well behind women’s in sales. In stores selling both men’s and women's shoes, the turnover is carried by women’s fashion footwear.

Mr L. C. H. Suckling, spokesman for the Retailers’ Association on footwear, said that while the level of retail sales was far from satisfactory, the men’s footwear trade was very depressed. The figure for national profit in the industry — 13 per cent for the June quarter, compared with the same period last year.

and 15.7 per cent for June this year, compared with June last year — was not seen as realistic for Christchurch, he said. Local sales would be below this figure. Between May and June

this year, footwear sales throughout New Zealand fell just over S2M.

“The majority of footwear retailers have held sales in the last two months, some of which would be in addition to seasonal sales, in an effort to help liquidity,” Mr Suckling said. He had estimated that retailers would have to make a 20 per cent profit over the year to beat all rising costs. Footwear retailers’ profits were limited by the percentage mark-up ceiling fixed by the Government since 1970, he said. Mr R. G. Maxted, the retailers’ spokesman on furniture, said that people

had cut down on buying furniture in line with the trend to acquire only essentials. Furniture retailers throughout New Zealand made a profit of 11.7 per cent in the June quarter, and a similar profit in June. But between May and June this year, turnover fell $lBO,OOO.

“We are now getting back to the days where we have to earn what we sell,” Mr Maxted said. “People no longer wander in off the street and buy something. They have to be really talked into it now.”

According to provisional results of a July survey of 150 major manufacturing companies throughout New Zealand, national sales of New Zealandmanufactured goods were down 1.62 per cent, and export sales down 8 per cent.

Forward orders for New Zealand - manufactured products were down 3.6 per cent internally, and down 12.2 per cent for export.

At the same time, the value of finished manufactured goods in stocks rose 6.2 per cent, indicating a distinct tardiness in purchasing. The survey also showed a distinct slowing in the payment of manufacturers’ accounts.

The retiring president of the Canterbury Manufacturers’ Association (Mr C. W. Campbell) said in his annual report last month that, after three years of negative growth. New Zealand’s economy had not yet reached the bottom of the trough, but that this point was coming steadily nearer. Consequences that could be expected included a continued weakening of domestic consumption as a direct result of Government policy; a decline in output and a rise in unemployment; a continuation of tight liquidity and high interest rates; and, it was hoped, a gradual reduction in the consumers price index growth rate from the next quarter.