I tend to agree with your analysis in terms of the economy struggling in areas apart form resources, and I also feel your call on interest rates currently being close to their midterm peak is very valid.
The one lingereing concern I have with the retail sector is that potentially consumer spending habits have changed. They have become somewhat conditioned to bargain hunting and cherry pick deals. Additionally consumers are increasingly going online to purchase branded products cheaper than they are available in the domestic malls.
It is increasingly hard to get shoppers into stores and even harder to get them to purchase(as opposed to trying on and going home to purchase on the net), my concern is that this is in fact a fundamental shift in shopping habits.
There is certainly plenty of talk in advertising circles that this is now a confirmed trend. Online retailing is growing, and is being added by the competitive retail environment.
I think this can be evidenced by large retailers trying to build a stronger online presence, because they are now in globally competitive retail environement and competing with retailers from Europe, USA, Asia who are also trying to grow the revenue line in a soft market.
I note Westfields recent online mall as an example of them trying to stay in the picture when consumers go straight to their favorite store via a computer screen.
I am not saying retail as we know it has changed for good, but certainly feel this needs to be factored in when picking retail stocks to invest in.
