RETAIL veteran Gerry Harvey has warned of more failed businesses and job losses this year unless the Australian economy quickly returns to growth, and jittery consumers switch from paying down their credit cards to patronising shopping centres.
Mr Harvey is chairman of the Harvey Norman furniture, bedding and electrical goods empire, which yesterday posted a small drop in half-year profit and a sales slump of more than 6 per cent.
Retail sales figures for January, out yesterday, showed growth of only 0.3 per cent - and all of the increase was accounted for by a 4.3 per cent jump in spending at cafes and restaurants.
For the second month in a row, supermarket and grocery store sales were flat. Electrical and electronic goods retailing was down 1.7 per cent. Mr Harvey said competition in home entertainment and computers was particularly intense and would cause more pain for retailers in coming months.
''If you are in technology, which is audio-visual and computers, you are getting a hiding,'' Mr Harvey said.
''It's just under extreme pressure and the evidence of that is Woolworths deciding to get rid of Dick Smith and the recent collapse of WOW Audio Visual Superstores, and in addition to that you have the other collapse of Sleep City bedding group.''
Mr Harvey told The Age he had recently been flooded with offers to buy struggling retail businesses, including some of the high-profile collapses, but he remained cautious.
''They are struggling, you have got businesses out there at the moment where the doors are open but they have no net assets … I'd have no doubt I could buy any one of them, but I don't want them and neither does anyone else. They are all failed businesses now.''
Harvey Norman's own poor results saw its share price dive as much as 6 per cent yesterday before closing down 4.2 per cent at $2.07.
Woolworths will unveil its first-half results today and is expected to underline the tough trading conditions.
Mr Harvey said the tough times for retailers were at odds with the very strong resources sector which should be showering Australia with wealth.
‘‘If you go to Singapore and Malaysia, for example, and you talk to people there they say ‘what’s wrong with you guys? You have got all that mining and those problems? I wish we had that [mining resources] and problems!’
‘‘They look at us with great amazement because they just can’t believe we are going on like we are.’’
Mr Harvey said despite our vibrant mining sector Australia was lacking economic growth to support retailers.‘‘You need growth, you need people.
‘‘Population creates growth, here we have political parties of all persuasions - Greens, Liberals and Labor - that don’t want any [population] growth and maybe we are paying the price of politicians [policies].’’
Woolworths chief executive Grant O'Brien could also use the half-year results to update the market on the proposed sale of Dick Smith and the $300 million in provisions it will have to book to disentangle itself from the struggling chain.
JPMorgan Australia economist Ben Jarman said: ''The downshift in Australian retail sales since the third quarter of 2011 has been quite pronounced, and is consistent with our view that accumulated wealth effects would pose a headwind to consumer spending through the next couple of quarters.''
Harvey Norman reported that its interim profit had fallen 2.1 per cent to $128.95 million.
The national retailer blamed the strengthening dollar, deteriorating economic confidence and weak consumer sentiment for its result, with pre-tax earnings for the half-year to December 31 falling from $198.61 million to $163.47 million - a drop of 17.7 per cent.
Its first-half sales results showed revenue from operations in Australia, New Zealand and Europe fell 6.1 per cent to $3.11 billion. Like-for-like sales fell 6.3 per cent.
According to CBRE's MarketView report, weakness in the retail sector is affecting Australia's multibillion-dollar commercial property industry, putting downward pressure on rents. Average rents dipped by 0.1 per cent in the December quarter, after five consecutive quarters of retail growth. Melbourne was the only Australian CBD retail market to record rental growth.
