Aussie IT retailers feel the economic pinch

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Aussie IT retailers feel the economic pinch

IT retailers are seeing a tightening of consumer belts as confidence in spending drops, petrol prices/interest rates rise, and an ominous threat of recession looms in the coming year.

Gerry Harvey, managing director of mass merchant retailer Harvey Norman, recently told Australian media that he was concerned about his company's sales figures for the new financial year. As Australia heads into tough economic times with a drop in consumer spending, announcements such as these are a warning sign for local Australian IT retailers.

Meng Wei, co-owner of IT retailer PC Market, told CRN that if Harvey Norman was feeling the pinch then a small business like PC Market was definitely seeing a drop in sales. “There isn’t much consumer confidence compared to last year. Usually at the end of the financial year people are rushing around buying IT products. Then August settles into a quieter month,” he said.

According to Wei, price drops in products will not have a significant impact on improving sales, as customers seem disinterested in picking up bargains from hardware vendors slashing component and monitor prices.

“Price dropping components hasn’t helped pick up more customers. They aren’t confident in buying products, because they might want to save for the future,” said Wei.

He told CRN the slowdown in IT spending could also be part of a cycle as IT spending has been growing steadily for the past six months. “Past six years ago computer and IT spending has been growing and growing. Maybe what we are seeing now is a drop in the number of IT products being bought and it might pick up again - hopefully sooner rather than later,” said Wei.

Niche tablet PC retailer Blue Zone, located in North Sydney, was also seeing a slow-down in sales. David Sloss, sales and account manager at Blue Zone, told CRN that things were ‘dead’. “No one wants to spend any money these days,” he said.

Sloss claimed the retailer was “pretty much doing cold calls lately” because the customers weren’t walking into the store to buy tablet PCs. “There’s not too much we can do at the moment. Things started to slow down probably when the new financial year started - if not a bit before then,” he said.

With the economy looking grim, Sloss hoped things would look up soon, although there was no telling when business would start picking up.
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