If you want any further evidence of the
slowing Australian economy and the impact of higher oil prices, look at
today’s first quarter sales figures from
retailing giant Coles Myer, showing that consumers are reducing certain
types of non-discretionary spending and concentrating on food and
liquor. Coles said in its commentary :

In the non-food businesses, Myer, Target and Officeworks
continued to grow comparative sales while Kmart was affected by the
sector-wide impact of fuel prices on consumer sentiment and spending.

Our
analysis shows a change in shopping patterns, particularly in lower
socio-economic areas where high fuel prices have had the greatest
impact and consumers are cautious and value conscious.

Group
sales rose by 5.6% on a headline basis and by 3.8% on a comparative
basis (comparing the same selling space in the first quarter with the
same selling space in the first quarter of 2005 and eliminating new
stores). That’s down sharply on the 10.7% for the fourth quarter of
2005 and 13.3% for the year.

Food and liquor rose by 4.4% on a
headline basis in the first quarter – a lot slower than the 11.1% in
the fourth quarter of 2005 and 6.9% for the full 2005 year, but on a
comparative basis sales rose by 2.1% compared to 1.1% for the fourth
quarter of 2005.

Myer, which is on the market with 20 groups
preparing bids for submission to the company next month, performed
well, with top-line sales and comparative sales both increasing by 2.4%
and easily outstripping the half a per cent growth in same store sales
in 2005.

But the company’s two discount chains, Target and Kmart,
seem to have taken the brunt of the consumer slowdown – Kmart saw sales
fall 1.4% in actual terms and 3.3% on a comparative basis, and Target
experienced a 3% growth in top line sales, which was down sharply on
the 8.8% growth seen in the final quarter of 2005.