With the vital Christmas shopping season in full swing, Andrew Dutkiewicz, chief executive of Noel Leeming Group, talks about what this morning's 1.5 per cent OCR cut might mean for one of the country's biggest retailers.
KEY POINTS:
At Noel Leeming, we are quietly confident leading into Christmas that consumers will open their wallets and start spending. The 1.5 per cent interest rate cut from the Reserve Bank, which was widely tipped, will have a positive effect on consumer confidence and we believe we will see a gradual shift in people's shopping behaviour.
At Noel Leeming and Bond + Bond stores we have already noted a lift in sales week on week as we head into our busiest period. The recent petrol price cuts, lower income tax from 1 October and previous interest rate cuts, coupled with a quick transition of Government, have all boosted New Zealanders' collective mood.
As well, Kiwis are traditionally generous at Christmas and see it as one time in the year when they like to buy something nice for others.
One would presume that a further cut in interest rates on Thursday would free up some extra dollars, although we are aware that most Kiwis have fixed mortgage rates so it will take time to flow through. However a promise of further tax reductions in April next year may see people be more confident to buy in the knowledge that they will be getting more money in the hand earlier rather than later.
Overall, our business is performing well and typically electronics and audio products are leading the Christmas trends. We expect to see this continue - and we have ensured we have a wide range of price points to ensure there's something for everyone's budget, whatever that is.
Naturally we, and all retailers, will be pleased to see a more relaxed spending attitude over the Christmas period. The rumoured interest rate cuts will have a positive effect and I think we will start to see an improved retail environment.
Andrew Dutkiewicz
