Federal election to cast shadow over retail

canberra, parliament house, politics, governmentIn mid-2013 just before the last election, I wrote a column on if, and how, election years affect retail sales. I found it hard to believe at that time that the research out of the US over a period of more than 40 years indicated that retail sales increase before an election and decrease after an election. Intuition led me to believe that the opposite would apply, but according to the reports, I was wrong.

Of course, history is not always a good indicator in matters such as this, because of the vast number of factors that affect elections, especially today. In the 1960s and beyond, there was a kind of predictability. Sure there were ups and downs, but unprecedented events such as the GFC did not happen. Red herrings like the stimulus package in late 2008 didn’t happen. I suppose it could be argued that the depression of the 1930s was a cataclysmic event not dissimilar to the GFC, but that was a long time past.

So what effect, if any, will the now confirmed July 2 election date have for retailers?

The last election, if you remember, was a long drawn out affair that exhausted the voting public. The Labor Party had leadership issues just before the election. A landslide was predicted for the Coalition. The previous election in 2010 showed no noticeable trend.

So far this year, the ASX 200 is travelling okay. There is nothing like the instability that surrounded the last election. At that time, the people were begging for an outcome, any outcome. The people were tired.

The mood this time round seems to be quite different. Yes – this double dissolution saga has dragged out a bit, and yes, the election is still two months away, but I suspect that nobody is really too fussed. The coalition at this stage will probably prevail, and it will be business as usual for another three years.

So what effect will the election have on retailers? My prediction is that it will have a negligible effect, if any. People will neither spend up before the election, and nor will they after the election. And they will not be inclined to hold back before or after.
All in all, this election appears to me to be a non-event – a damp squib. Mark the diary, watch the result on TV – it is always fun – and insofar as us humble retailers are concerned, go back to work on Monday July 4, if you are lucky enough to have the weekend off. So let’s make the most of it – the normal retail calendar and end of year sales will just happen as usual.

Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at stuart@impactretailing.com.au or 0414 631 702.

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