15 Nov 2012

Weak margins main concern for retail industry

7:07 am on 15 November 2012

The Retailers Association says weak margins are the industry's main concern while consumers are cautious about opening their wallets.

Official figures show retail spending declined 0.8% in the three months to September compared with the previous quarter, when it rose 1.1%.

Excluding price changes, the volumes fell 0.4%, with shoppers buying less in nine of the 15 retail industries, including supermarket, accommodation, car and fuel sales.

Stripping out car and fuel sales, core retail volumes fell 0.3%.

Retailers Association chief executive John Albertson said the quarter is not as robust as the association had hoped.

He says grocery and petrol prices have been falling, which makes it very hard to generate growth.

"I think the bigger issue is not so much whether we are getting the sales, but it's more around how much margin is being made and one would have to say with the level of price activity at the moment, margins aren't strong.''

Mr Albertson said retailers need to adopt the mindset of adding value rather than just taking dollars off, but pricing is a decision that each retailer has to take themselves.

He hopes there will now be a good run-up to Christmas.