Retailers hold their breath as effect of handouts fades

SYDNEY: Retailers are cautious about the fading effect of the Government's stimulus package as people are remaining careful with their money.

Retailers were keen to snare a slice of the cash bonus payments when they were rolled out from March last year offering a range of in-store specials, especially for clothing and electronics.

The one-off payments of up to A$950 ($1223) to consumers last year were part of the federal Government's A$42 billion second stimulus package to revive the economy that had been threatened by the global financial crisis.

FW Holst retail analyst David Spry said there would be an effect from the stimulus package fading but not a drawn-out slowdown as companies ramped up on promotional activity.

"The market will be a bit choppy but there won't be a significant downturn, it will probably have a little bit of a moderating perhaps in the short-term," Spry said.

Though not all retailers received huge benefits from the stimulus, companies big and small expressed caution about cycling the payments during the February corporate profit season.

Upmarket department store David Jones, which had repeatedly said the handouts had little effect on its growth in 2009, surprised the market by saying the A$10 billion of payments to consumers did have an overall impact.

Bureau of Statistics retail data show there was an immediate hit on spending when the handouts were rolled out, but it faded after three months.

- AAP