How this crazy warm weather is wreaking havoc with Australia’s biggest retailers

IT’S ALL fun in the sun for some, but unseasonably warm weather in Australia’s southeast has been an economic disaster.

Why go to a shopping centre when the weather’s this good? Picture: Cameron Richardson

IT’S THE time of year when we should be stocking up on soup, buying a new heater and shopping for a warm winter coat.

But the thought of winter shopping has been far from many Australians’ minds, with the southeastern states enjoying an autumn that just seems to go on forever.

Sydney has been the most affected by the El Niño conditions that have kept temperatures in the mid-20s in what’s shaping up to be the city’s hottest April since 2005.

And while it’s great news for those of us who detest the cold, the unseasonably warm weather is wreaking havoc on our retailers.

Wesfarmers boss Richard Goyder warned investors last week that sales growth at Kmart and Target faced a serious climatological threat.

“There is no doubt there’s risk around winter apparel at the moment because of the warm weather we’ve had,” Mr Goyder said in a third quarter earnings call. “That may to a degree dissipate if we get a really cold snap soon.”

With Target in the doldrums amid the earnings scandal, the seasonal change is more important than ever for the beleaguered department store.

And the wider economy could also be at risk, with knock-on impacts caused by a fall in passing trade.

Time to buy a coat? I think not.

Retail expert Dr Violet Lazarevic, from the Monash Business School, told news.com.au the weather affected more than just winter clothing.

“With shopping centres, people are more likely to go in when the weather is extreme; if it’s really hot or really cold, people come in to escape,” she said. “But when it’s mild, there’s not much foot traffic.”

High-cost, planned purchases like a new car or television would not be significantly affected, she said, while groceries would be mostly untouched, although people might buy different types of food.

But unplanned purchases such as clothing, shoes, electronics and other impulse buys were likely to be hit hard.

“What we saw in the United States this year, where they also had a really late change, is that stock was held for a long time as it was not turned over — people were not buying winter clothes,” Dr Lazarevic said.

Get ready for the ultimate winter clearance sale. Picture: Mike Burton

Wesfarmers’ department store bosses have warned the company’s investors to brace for the worst.

Kmart Managing Director Ian Bailey said in media statement last week that while the business had achieved strong momentum, “sales growth over the remainder of the financial year will be affected by winter category performance, which has started more slowly than last year”.

As for Target, Wesfarmers’ department stores division boss Guy Russo said a repeat of the clearance sales need to move the retailer’s summer stock could be on the cards this winter.

“Higher clearance activity is also expected in the fourth quarter, with further risk in relation to winter categories,” Mr Russo said.

Dr Lazarevic said the extent of markdowns would depend on how soon the weather turned, and how cold it would get.

“It will depend on how extreme the cold change is,” she said.

“In the US, they had a late start [to winter] but then it got really cold and they saw their stock turn over really quickly, so there was not a lot left over.”

But if we got a mild winter, she said, heavy discounting could be expected.

Rooftop bars like Captain Baxter in St Kilda have been lapping up the warmth. Picture: Ian Currie

In Sydney, retailers will be waiting with bated breath as the warm stretch runs its course.

They’ll have to brave a stunning 26 degree Friday, and a likely continuation of mid-20s weather into next week, according to Bureau of Meteorology forecasts.

“Looking in the relatively short term, the above average temperatures are expected to continue for at least the next week in New South Wales,” Climatologist Blair Trewin said on Wednesday.

“It’s looking like returning to closer to normal from the weekend onwards in Victoria.”

WEATHER WINNERS

It’s not all bad news for business.

Some traders have been making hay while it rains, or should we say — when it doesn’t rain.

Aurora Hotel manager Anh Tran said the venue was preparing for a busy weekend, with a higher-than-usual number of bookings for its rooftop bar in Sydney’s Surry Hills.

The rooftop bar at the Glenmore Hotel in The Rocks was also thriving, with “no signs of a drop off in trade well into autumn”, said marketing director Paris Ballantyne.

“We had a very successful Anzac Day at The Glenmore, with a beautiful sunny day and record patronage,” Ms Ballantyne said.

“The colder weather has taken longer to come into effect and customers are relishing the sunshine and warmth on our rooftop bar, with no signs of a drop off in trade well into autumn.’

— with Frank Chung

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