Happy days

Smart companies will remember the RBA reaction to last year’s surge in consumer spending – a series of rate hikes – to ensure that happy days do not turn out to presage an outburst of inflation. As the cost of imports continues to hold at record low rates and exports are affected by currency parity flowing from the mining sector, smart companies will lock in forward orders.

Keeping inventories tight and slightly extending terms of trade to downstream distributors makes sense in the light of rising levels of strong consumer spending.

Joe Hockey is on a winner in challenging Wayne Swan to do more than talk firmly to the banks as they report record profits. The mood of the electorate supports the Greens’ and the independents’ call for a new financial services inquiry. For example, as Wyndham Vale posted on 21 October in The Herald Sun:

“The banks are greedy and it is time the govt did something about it. It is only since the GFC that the banks have raised their rates above the Reserve Bank base rate – very, very, greedy. I am sick of them crying poor and then making billion dollar profits – we are not the USA and don’t have the population of other economic areas to enable us to sustain these rates.”

Australian consumers, however, are increasingly confident about their financial situation and are looking forward to a happy Christmas and an even more prosperous new year. As indicated in earlier columns (22/10 and 8/10), quality customers have been watching the RBA gyrations and the prospects of a couple more rate rises and now believe that the good times are here to stay.

Gary Morgan says, “Consumer confidence has jumped 2.4pts to 130.1 – its highest for nearly six years, since February 2005. Four out of the five components moved further into positive territory, with the biggest increases coming in how Australians rate their personal financial situations.

“An increasing number of Australians (43%, up 2%) expect to be ‘better off financially’ this time next year and an increasing number of Australians (34%, up 1%) say that their family is ‘better off financially’ than at this time last year.

“Further good news for Australians is the lower-than-expected inflation number for the September quarter – an annual rate of 2.8%. The low CPI, helped by the high Australian dollar, means there is no reason for the RBA to raise interest rates next week to contain a ‘non-existent’ inflation problem.”

So now is the time to shift from a discount mentality to a quality and value sales orientation. Invite your retail customers to take up your best lines and promote premium bundles rather than single items. The rush back into the market presages a great holiday season that requires high levels of sales support, quality assurance and customer relationship management skills.