|Pia Miranda and Miranda Otto at Vogue Fashion's Night Out|
A sparkly glimmer of hope in the ongoing narrative of the Australian retail sector's woes, FNO is the sort of win-win(-win) initiative that capitalism is made of: while the Vogue brand benefits from its ostensibly benevolent endeavour to prop up the business of fashion retailers (and advertisers), the stores themselves benefit from the increased traffic and potential ongoing patronage, while shoppers walk away with bags stuffed with gift-with-attendance (GWA) goodies feeling chuffed over the whole experience.
Reminiscent of the bygone days when shopping was a real experience – when mothers, grandmothers and girlfriends accompanied us to the stores in pursuit of necessities such as new pantyhose and an outfit to wear on a special occasion, such as going to the ballet (a quaint notion in today's world of fast-fast-gimme-more fashion) – FNO, established in New York in 2009, is the new jewel in Vogue's fashion crown.
While there is evidence that retail is still teetering on precarious high heels, such as Deloitte Access Economics' forecasting a "bad to worse" scenario, today's Westpac/Melbourne Institute consumer sentiment data will give retailers (and their glossy friends) some welcome relief.
Following sizeable falls in July and August, things are looking up for September. The index jumped 8.1% to 96.9 points, a "surprisingly strong result" according to Westpac chief economist Bill Evans. This is attributable to the Reserve Bank holding off on rate rises, which gives mortgage holders (and there are more of them now than ever, and also more people are planning to buy now than in the past two years) some relief, with the family finance index up 11.2% on a year ago.
However, the economic data is still very mixed. The latest Deloitte Access Economics Retail Forecast gloomily predicts sales will grow by only 1.5% in 2011-12, with sales increasing just 1.3%, with a return to more positive growth (3.3%) in 2012-13 attributable to an ease in consumer caution.
Working against local business are a strong Australian dollar, lower employment (and fears of further redundancies, such as rumors around Suncorp layoffs this week), more home mortgages (despite falling house prices) and the looming carbon tax legislation introduced to parliament yesterday, as well as confusion over the "two-speed economy" (what happens when the mining boom busts?) and a hangover from losses to superannuation accounts experienced during the GFC are reason to tread carefully.
While the Australian Bureau of Statistics says households are spending 38% more than they were six years ago on good and services, relative to a 19% rise in costs and 50% rise in gross household incomes since 2003/04, there is evidence that people are reluctant to spend on credit, while personal loans and debit cards are in demand.
Whether the boom and bust of the GFC, together with climate change, will result in a lasting paradigm shift in terms of how much stuff people are prepared to consume – and spend with businesses, and on brands, they believe in – remains to be seen.
Perhaps re-gearing our personal approaches to discretionary spending, consumption and giving to something more commensurate with necessity, need and the pleasures of a savoured shopping expedition – whether scouring a second-hand store or spending a little more – will see the lucky country become a land of sensible frugality paired with prosperity?
Incomes and productivity are up, so why do we feel so low?
Peter Switzer on investor signposts (week beginning September 11, 2011)
Girl With a Satchel