The mayor of Sydney has come out in support of a campaign urging shoppers to buy fewer new products, to the horror of struggling retailers and the New South Wales premier.
The outcry comes as the new ANZ Small Business Sales Trends report shows that although small business sales were up 3.8% over the year, retail growth stopped short at just 4%, compared to 9.2% overall.
Last week, the City of Sydney council and its mayor Clover Moore backed the “Buy Nothing New” campaign, but New South Wales Premier Barry O’Farrell has called the move “nuts”, citing the continued poor retail conditions for traders.
“One in three people going into the Sydney CBD each day to work in retail and here you have the lord mayor telling people not to buy,” Premier O’Farrell said.
“This is apparently a ‘shop less, live more’ policy but, ultimately, under the Lord Mayor’s proposal it will be shop less, live poor for those people in the Sydney CBD who work in retail.”
But the mayor told SmartCompany in a statement the issue has been “wildly exaggerated”.
“The facts are this is not a City event or campaign. It is a national campaign supported by charity groups to encourage people to buy second hand goods and recycle.”
“All the City is doing is allowing the organisers to use Customs House forecourt for 10 days for an interactive display. The City is not providing the organisers with any financial or promotional support.”
Forrester Research analyst Steven Noble says there is evidence to suggest the campaign won’t have much of an impact on sales.
“You really have to ask how many people are going to stop buying things altogether,” he says. “The campaigns that usually have the most impact are ones that fit most neatly with preferences and behaviour.”
“For example, the current health campaign, ‘Don’t stop it, swap it’, works because you’re asking someone to make a change to something they already do.”
“If this was actually going to reduce retail sales in the city, then I would expect more people to be expressing concerns. I doubt it will change much behaviour at all.”
NSW Small Business Minister Katrina Hodgkinson said people should ignore the campaign altogether.
“It is irresponsible for the City of Sydney Council to provide sponsorship to this ill-thought-out campaign and ask consumers to boycott their local retailers for a month,” she said in a statement.
“The council’s anti-retail and anti-shopping approach shows it is completely out of touch with reality and the hardships small businesses face in this tough economic climate.”
Hodgkinson was contacted by SmartCompany this morning, but were unavailable to reply before publication.
Noble’s prediction the campaign may be a flop should be an encouragement to retailers – especially considering the latest results from the ANZ Small Business Sales Trends report.
The results show that although business sales increased 6.9% in May, and by 3.8% on a yearly basis, retail sales failed to impress.
In fact, appliance and electrical sales dropped 2.6% over the year, with clothing and fashion down 1.2%, and homewares and furniture down 1.9%, with the decline in that market largely associated with the downturn in home construction.
The only areas that showed improvement were automotive, up 7.8%, with business services up 5.9% as well.
Western Australia recorded the highest rate at 6.5%, followed by Northern Territory at 6.1%, and Queensland at 5.1%. Tasmania and the ACT were the weakest, at 0.9% and 1.3% respectively.
The news is worse for the year to date. Overall, retail sales recorded just 1.4% growth, while non-retail grew by 5.5%.
Appliances and electrical are down 2.6%, clothing and fashion down 1.2%, and homewares and furniture down 1.9%. The strongest sectors for the year to date are automotive at 7.8%, and travel and entertainment at 6.7%.
However, there are some good results in retail, with restaurants up 6.9% for the year to date, followed by 3.9% for other food outlets and 3.4% for “other retail”.
Business services and personal services are also strong, up 5.9% and 4.9% respectively.
ANZ general manager of small business, Nick Reader, said in a statement that, while it’s “pleasing” to see some improvement, the industry continued “to experience difficult business conditions”.
Head of ANZ economics Ivan Colhoun also said the differing results in industries and states highlights the nature of the economy, and that this won’t change anytime soon.
“The retail categories of electricals and clothing – which are typically the areas heavily exposed to the high Australian dollar and, as a result, vulnerable to the increased prevalence of online shopping platforms – continued to see declining sales in May.”
“The two-speed geographic nature of small business sales also continued to be reflected in the data, with WA, Queensland, and the NT all recording stronger rates of sales growth.”