Retailers desperate to shift stock as sector braces for horror year ahead

Experts warn retailers will be forced to raise prices up to 30% in March as the falling Aussie dollar leads to a surge in the price of imported goods.

Experts warn retailers will be forced to raise prices up to 30% in March as the falling Aussie dollar leads to a surge in the price of imported goods.

In an extensive interview with SmartCompany, Fred Milgrom, founder of online retailer Zazz.com.au, says retailers have been caught with too much stock due to lower consumer spending, and are desperate to clear their warehouses.

“So we’re going to see a lot of sales coming up. The pre-Christmas sales, the Christmas sales, the Boxing Day sales, the New Years Day sales and so on, in a desperate attempt to try and move stock,” he says.

“But next year when this stock has moved out of the system one way or the other, there’s going to be a major problem because the dollar has dropped significantly and there’s going to be shock because prices are going to be up 20%, 25% and 30% on what they are now.

“So, we are going to find in March, not only are times tough but all of a sudden people go into the stores and say ‘hey I’m not paying that’. So I’m expecting that things will be worse in March.”

But while Milgrom says Australians will have to get used to “a lower standard of living,” he insists the future will remain bright.

“I think it will probably be better in 2010.”

Retail analyst Rob Lake agrees, saying some of the Christmas sales are going to be huge as retailers try to clear stock.

“They have inventory they’re not moving, and that inventory was bought under old dollar value. But anything that was costing $1 three months ago is going to cost $1.40. We’re already starting to see it.”

Lake says seasonal items such as clothes will be particularly discounted after Christmas, as retailers will be keen to turn that stock into cash to buy winter clothing inventory.

Lake says the big winners will be consumers, who should get ready to snap up bargains.

“Buy it now. Keep your eyes open,” he says.

But Richard Uechtritz, chief executive of electronics retailer JB Hi-Fi, says while the price hikes may apply to fashion and imported goods, electronics will remain immune.

“If you’re in the fashion business, the mass merchant business, then yes, you’re going to see a lot of more price increases.

“But in the electronics industry, I don’t think we’ll see too much movement. You might see a slowdown, but I very much doubt if you’ll see price increases,” he says.

Retail sales have already shown signs of decline. Electronics and furniture retailer Harvey Norman announced yesterday that sales slipped 0.8% in the 28 days to 9 November.

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