Consumer spending restrained in key retail sectors

Consumer spending in the key listed retail sectors of consumer durables and apparel remains subdued and most retailers are still reporting a difficult environment, Forsyth Barr broker Suzanne Kinnaird says.

Forsyth Barr's preferred retailers were Kathmandu, Briscoe Group and Michael Hill, with Hallenstein Glasson and Pumpkin Patch attractive turnaround options.

Forsyth Barr had a buy recommendation on Kathmandu and accumulate on the other mentioned stocks, she said.

The Warehouse was beginning a major reinvestment programme and might become a turnaround story but was less attractively priced than the others and Forsyth Barr's recommendation on the company's shares was hold, as it was with Restaurant Brands, Ms Kinnaird said.

Across the Tasman, discount department store chain Kmart says it does not fear competition from internet shopping sites.

"Our [Kmart's] prices are so low, I am absolutely not concerned at all about the internet," Kmart managing director Guy Russo told reporters after addressing an American Chamber of Commerce in Australia luncheon.

"If I were in a higher-end retailer like David Jones and Myer, I would be [concerned].

"But my view on the internet and online shopping is that I take the customers' point of view, the customers' side, and that is that it gives them more choice; it allows them to shop around without leaving home," Mr Russo said.

However, online shoppers could not check the quality of goods before they bought them on the internet because they could not touch the product, Mr Russo said.

The internet meant that the whole industry needed to do a much better job to make sure they got a fair share of the consumer's wallet.

Mr Russo doubted an internet shopping site operator could beat Kmart's prices.

It would would cost more to deliver the goods bought on the internet to someone's home than the goods cost themselves.

Kmart was buying bigger volumes from suppliers in China, India and Bangladesh, which had offset cost increases from suppliers arising from pressure to pay higher wages to their workers, he said.

 

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