Gerry Harvey predicts record Christmas, but research points to smaller stockings

Retail king Gerry Harvey has given a glowing assessment of the outlook for the Christmas shopping period, declaring his chain Harvey Norman would enjoy “record” sales over the peak shopping period.

“I am absolutely flabbergasted sales are as good as they are,” Harvey told reporters in Sydney yesterday.

“Our sales this year are going to be an absolute record, this is going to be the biggest Christmas we have ever had, we are going to break all records.”

Harvey Norman said last month that like-for-like sales (which strip out the impact of store openings and closures) were up 4.6% during the three months to 30 September, although the company did not release information about the state of margins, which have been under pressure for the last 12 months.

Harvey’s declaration received some support from the world of online retail, where users of online shopping site eBay reported problems browsing the site on the weekend due to an unusually high level of traffic.

An eBay spokesman said the demand was “unrepented”. The site currently has 200 live listings, about 33% more than at the same time last year.

But research firm IBISWorld has warned retailers that the spending growth rate in 2009 will be markedly lower than in 2007 and 2008.

IBISWorld expects total retail spending during the month of December to reach $20.5 billion, up 5% compared to last year.

But IBISWorld general manager Robert Bryant says that’s far lower than the 8.2% growth rate in 2007 and the 5.7% rate seen in 2008, when the Federal Government’s stimulus package helped keep the registers ringing.

“This year, while the economy is recovering and sentiment is improving, rising interest rates are raising the cost of debt and reducing disposable household income – meaning retailers will need to work extra hard to capture Christmas sales,” he says.

IBISWorld expects total spending at retail chains (including department stores and discount outlets) will hit $1.64 billion in 2009, with 70% of that going to low and mid-end stores such as Target, Big W and Kmart, while 30% will go to high-end department stores such as Myer and David Jones.

Electronic gifts will once again top most shopping lists, with total spending on household goods tipped to hit $3.75 billion. IBISWorld expects the most popular items will include laptops, the new Nintendo DS, Nintendo’s Wii console and Sports Pack, PS3 Slimline Console Pack; the Guitar Hero game for the Wii and the iPod Touch.

Supermarket and grocery stores are expected to take $6.87 billion of the Christmas spend, while a further $724.9 million will go on specialised food, and $733.2 million on liquor.

In the supermarket sector, Woolworths and Coles are once again expected to be the market leaders, accounting for 40% and 30% of the spend respectively, while Independent Grocers of Australia (IGA) will account for 7%, and ALDI only 1.5%.