Federation Centres’ Sewell Sees Online Rivals Spurring Retailers
Australian retail outlets are improving operations and profitability in response to the challenge from online shopping rivals, said Steven Sewell, chief executive officer of shopping mall operator Federation Centres. (FDC)
“What it’s done, and we are seeing it in the listed retailers’ results for the December half, is that the profitability of most of the retail businesses in Australia is actually doing very well,” Sewell told Australian Broadcasting Corp. television today, according to a transcript. “You are seeing a lot of retailers putting a lot of effort into making sure they maximize the profitability of their businesses.”
Federation Centres, formerly known as Centro Retail Australia, last month reported net income of A$115.9 million ($118 million) in the six months ended Dec. 31, from a loss of A$100.1 million a year earlier.
Australian consumer confidence surged in February by the most since 2011 as households responded to 1.75 percentage points of reductions in the benchmark interest rate to a half-century low of 3 percent. The nation’s currency has surged about 60 percent the past four years, reducing the cost of imports.
Retailers are “obviously helped by the currency,” Sewell told ABC TV’s Inside Business program. “We think that retailers are able to work out how they can fit both with the bricks and mortar offer, so what’s their store face as well as their distribution wholesale, or from an online channel.”
Reserve Bank of Australia Assistant Governor Christopher Kent said last month that consumer surveys have been showing “quite a positive” trend in recent months.
“Consumers in the most recent reading are feeling better-than-average across a number of sets of the indicators that go into these surveys,” Kent said in a Feb. 15 speech in Perth. Those sentiments were echoed by Harvey Norman Holdings Ltd. (HVN) Chief Executive Officer Gerry Harvey.
“It does look as if, with the figures we’ve got in January, February, that we’ve turned the corner,” Harvey said in a comment shown on Inside Business today. “We’re now not seeing sales decrease every month, which has been going on for such a long time. They’re actually increasing.”
Concern about job security had curbed retail spending, which fell in each of the final three months of 2012, the longest decline in 13 years.
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