KEY POINTS:
Shoppers are set for bargains on big-ticket items as retailers start to feel the full effects of the sales slump and increase in import prices.
More economic gloom is forecast, with world leaders waking yesterday to news that Wall St had closed at five-year lows, while latest
Statistics New Zealand figure showed a sharp fall in sales of "discretionary" items.
New and used cars were hardest hit, with sales in August down 21.4 per cent year-on-year. Close behind were furniture and floor coverings, with sales falling more than 21 per cent. Hardware dropped 9.1 per cent and appliances 2.3 per cent.
Noel Leeming Group chief executive Andrew Dutkiewicz told the Herald on Sunday that appliance and entertainment chains Noel Leeming and Bond & Bond were seeing a "reasonable slowdown" in sales of big-ticket items
"We still sell thousands of TVs a week but it's lower than last year."
The falling New Zealand dollar was already pushing up the prices retailers pay for imports. Wholesale computers prices were rising "for the first time in memory" while TV prices were levelling out after years of decline.
"Retailers will be doing all they can to get consumers interested in buying big ticket items."
Briscoe Group, which includes homeware giant Briscoe, Rebel Sport and Living & Giving chains, reported a 70.6 per cent fall in after-tax profits in the six months to July 27 - and that was before the worst of the world financial meltdown had struck.
Managing director Rod Duke put the fall down to lower sales, tighter margins due to discounting and extra promotions to drive sales.
Economist Brian Gaynor said the retail sector, which employs 325,000 people, about 20 per cent of the national workforce, was being hammered here like it was overseas. Falling demand, rising import prices, a weakening Kiwi dollar, and rent rises were all squeezing profits.
"You could call it the perfect storm for retail."
Eftpos figures from Paymark, which processes 75 per cent of electronic retail transactions in New Zealand, show consumers holding back on non-essentials but spending more on food.
Paymark spokesman Anthony Byett said: "We expect larger, big-ticket item retailers to feel the squeeze."
Gaynor said job losses in retail were inevitable. Smaller shops such as corner dairies would suffer more than major retailers and he also predicted casualties in motor retailers.
"You're going to see an awful lot of empty caryards in six months' time."
Meanwhile, TradeMe figures suggested more people are selling possessions for extra cash. The online marketplace had seen listings jump by up to 20 per cent in some categories, including luxury cars.
- ADDITIONAL REPORTING: NZPA