RETAIL veteran Gerry Harvey has warned of more failed businesses and job losses this year unless the Australian economy quickly returns to growth, and jittery consumers switch from paying down their credit cards to patronising shopping centres.

Mr Harvey is chairman of the Harvey Norman furniture, bedding and electrical goods empire, which yesterday posted a small drop in half-year profit and a sales slump of more than 6 per cent.

The problem is you ... Just window shopping. Credit:Rob Homer

Retail sales figures for January, out yesterday, showed growth of only 0.3 per cent - and all of the increase was accounted for by a 4.3 per cent jump in spending at cafes and restaurants.

For the second month in a row, supermarket and grocery store sales were flat. Electrical and electronic goods retailing was down 1.7 per cent. Mr Harvey said competition in home entertainment and computers was particularly intense and would cause more pain for retailers in coming months.