An unseasonably cold start to Spring is threatening to inflict further pain on Australia’s struggling retailers, with CommSec economist Craig James warning retailers of clothing, outdoor goods and food could be hit hard.
While economists usually spend their time looking at interest rates and demographic data, James has prepared a special report on temperatures around Australia in the first weeks of September.
According to James, Sydney is experiencing its coldest September in 13 years, Melbourne its coldest start to Spring in 16 years and Adelaide is shivering through its coldest start to September in 18 years.
All of which is bad news for Australia’s struggling retailers.
“Retailers are under constant pressure to get seasonal inventory levels ‘right’ – that is to ensure that they are not left with an over-supply of stock or conversely are left short of items demanded by consumers,” James says.
“Spring and autumn are the key seasons for seasonal stock. If the weather fails to warm up early enough in the spring, some consumers may decide to not substantially add to their summer wardrobes, concluding that they won’t get the value out of a ‘short’ season.”
“Retailers are already substantially discounting stock in response to conservative and price-conscious consumer behaviour. The last thing any clothing or department store retailer wants is for further challenges to be posed by the weather.”
James says retailers who sell surf and beach wear, outside furniture, and electrical goods such as electric fans and air conditioners will be hoping for temperatures to warm up in the coming weeks and months, although cafes, restaurants and recreational businesses will also be hoping to see some more sunshine.
Tourism operators will also be tracking the weather carefully.
But it’s clear that not every retailer is feeling the pinch just yet.
Jane Cay, founder of Cooma-based fashion women’s fashion website Birdsnest.com.au says her company has had a “ripper start to Spring” as customers try to will away the winter blues and gear up for spring racing events.
“We hit budget for September yesterday, so we broke out the champagne,” Cay says.
“I think everyone just gets over winter and says bring on the dresses and frocks.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
