Stores need to offer better value: Goyder

He said retailers such as Wesfarmers, which owns Coles supermarkets, Bunnings hardware and Target and Kmart, would need to work harder to attract customers by offering better value.

Meanwhile, the best sales performance for Target and Kmart in years has provided further evidence that the government's cash splash to compensate households for the carbon tax has found its way into clothing, shoes, toys and housewares.

Mr Goyder, speaking yesterday after the release of Wesfarmers' full-year sales, said he had not seen a shift in consumer confidence since the start of the year and was not expecting an improvement in the near term. "I don't think we have seen much change in the external environment over the last six months," he said. "Our base line would be that things will tick along as they are now."

Wesfarmers said total sales at Coles rose 6.1 per cent to $33.7 billion, as food and liquor sales rose 4.6 per cent to $26.18 billion. Comparable food and liquor sales were 3.7 per cent higher for the year. For the fourth quarter, same-store sales growth rose 3 per cent to $6.5 billion, beating Woolworths for the 12th straight quarter.

But depressed consumer sentiment concerns retailers. A succession of interest rate cuts as well as billions of dollars in investment triggered by the mining boom has not been enough to give consumers more confidence.

"I understand why people are being cautious," Mr Goyder said. "We have been through a period in the global financial crisis where, and subsequently, you have had asset values fall, businesses tighten up on a whole bunch of things, house prices over time that declined a bit and superannuation funds where equities have come back.

"I do share with others the view that the Australian economy is in relatively great shape and I'd rather be doing business in Australia than most other places in the world at the moment."

Target and Kmart were flat for the year, but in the fourth quarter sales at Target rose by 2 per cent to $915 million, with Kmart up 2.2 per cent at $927 million.

On a comparable store sales basis, Target sales rose 4.5 per cent and those at Kmart 2.1 per cent.

Bunnings' full-year sales hit $7.15 billion, up 5.6 per cent, with quarterly sales 4.1 per cent higher at $1.62 billion. Comparable store sales growth for the quarter was 2.9 per cent.