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Sales season to get an extension

Department stores Myer and David Jones relied heavily on discounting over the crucial December to mid-January period. Both kicked off their sales earlier than usual, and offered deeper discounts. Where the stores generally offer up to 40 per cent off, the past two months it peaked at closer to 50 per cent.

Savvy consumers though still shopped at the discount department stores.

Discretionary spending was again down, this time for cosmetics, DVDs and (oddly enough, given the season) wine. But spending on luggage was up on previous years as more people headed overseas due to the stronger Australian dollar. Women's apparel and shoes were flat, until the sales arrived, while men still preferred their comfortable chinos and polo shirts of two seasons ago.

Despite another rise in interest rates looming, the upturn in residential property markets saw a rise in demand for bedding and soft furnishings, but a cooler summer in some parts of the country and scorching temperatures elsewhere, put the the family barbecue on hold, with sales in that category falling over the past two months.

A Macquarie Equities survey of major retailers found that while a majority was confident of 2010 being better than last year, the bears were still lurking, and further discounting was likely.

Without quantifying second-quarter comparative sales expectations, the Macquarie survey indicated that JB Hi-Fi and Kmart were trading well, while BIG W and Target probably had struggled.