Ready, steady, grow

Smart companies will need to reach out to their premium customers in the next few weeks to generate high tech and holiday purchasing plans, to overcome the mid-year slump in sales following months of threats of Greek defaults, US debt crises and media beat-ups that generated higher than average equity market volatility.

Scott Elliott in the Australian Financial Review reports that leading international fashion brands are dominating Melbourne’s retail leasing market in the lead up to Christmas at the same time as Australian labels consolidate their presence in the city.

Max Cooke, CBRE’s senior manager for retail services says that “economically, Australia sits in a very good position compared with the rest of the world. There is a low level of unemployment, decreasing interest rates, positive GDP growth and strong levels of confidence from major developers and international investors”. His confidence has been boosted by negotiations with 10 different retailers from around the world seeking space for their first store.

While the RBA is still deeply concerned about talk of Greece being forced to leave the euro-zone and Germany blocking the creation of a United States of Europe bout of note printing, there is a belief that periodic bouts of considerable uncertainty and volatility represent a greater threat to a ready, steady grow commitment in our major non-commodity trading partners.

Gary Morgan is calling on the RBA to inject a little more liquidity into the holiday season with a further rate cut, but there is increasing evidence that Glenn Stevens will defy media forecasts of a cut and hold out until the New Year to see how things turn out. In reality Australia’s central bank is likely to want to see how Europe’s sovereign debt crisis works out as it says, “A worse outcome in Europe would adversely affect the Australian economy, and underlying inflation would be likely to decline”.

That leads to the view that the RBA is unlikely to cut interest rates again in December with a neutral policy stance firmly in place after interest rates were cut for the first time since early 2009 on Melbourne Cup Day. The core consumer price index is now expected to rise by just 2.5% by the middle of 2012.

By the end of 2013, it is likely to be up around a third of the rate of growth of the Chinese economy, which is expected to moderate to an annual pace of between 8% and 9% over coming years. So our domestic economy is expected to grow by a solid 4% in year-ended terms to the middle of 2012, remaining at around average rates of growth of 3% to 4% from then until the end of 2013.

Australians are more optimistic about Australia’s economy over the next 12 months with 34% (up 2%) of Australians expecting Australia to have “good times” economically compared to 33% (down 2%) that expect “bad times” economically. Australians are also optimistic about the longer-term with 38% (up 2%) of Australians expecting Australia to have “good times” economically over the next five years compared to 21% (down 2%) that expect “bad times”.

This is the time to increase customer contact and find ways to build store traffic, compete with online offers by rewarding consumers who actually turn up to see what’s on offer and take advantage of a rush of pre-sale specials that cut into the mountain of over-stocked inventory. As always, the key to success relies upon motivated sales staff and exemplary attention to quality service.

Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.