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The retail sector was still strong despite uncertainty affecting global share markets and inflation fears, the chief executive of supermarket operator Woolworths, Michael Luscombe, said yesterday.
"Retailing, generally, seems to be still reasonably strong, certainly in our business," Luscombe said. "The trends through last year seem to be continuing.
"The only cloud on the horizon will be possibly what effect on discretionary spending a further interest rate increase and prolonged high petrol prices may have - that's a bit of a crystal ball.
"Typically when we've reached that in the past, there has been a period when people tighten their belts.
"So I guess we'll wait and see on that."
Asked if tighter credit markets were affecting the retail sector, Luscombe said he could not speak for other retailers, but "certainly, it's not going to affect Woolworths".
"Others may have large debt that they need to refinance," he said.
"Obviously they may have to pay a little bit more for that debt.
"That's not something we're facing."
Luscombe made the comments as Woolworths moves to assist farmers affected by the Australian drought.
Woolworths yesterday said it would give its profits from trading on Friday, February 15, towards helping people in regional areas.
The money will go towards helping thousands of farming families with immediate financial relief, and sponsoring research into sustainable farming practices. Luscombe said few regional areas would say they were going through a golden era at the moment.
"Our feedback from the Country Women's Association and our store managers out in the country is that a lot of people are still doing it pretty tough irrespective of the rain that may have fallen in some areas," Luscombe said. But despite the fact that many people in regional areas were hurting, the drought had not hurt sales in Woolworths stores.
"What has been evident to us is a swing to private-label products that deliver much better value, both at the home brand end and at the premium end," Luscombe said.
He said the drought had certainly tightened the market for various products.
"Yields are down, and in many products we've had to vary our quality specs to ensure that we can get enough," he said.
But there had been no need to import more products. Sustainable farming practices would remain an issue after the drought.
- AAP
