Steady As She Goes: Retailers Expect Solid But Not Spectacular Christmas
Three quarters of retailers are expecting Christmas sales to be higher than last year, the survey of 63 senior retail executives found, however no retailers are expecting more than 5 per cent sales growth, with 38 per cent expecting 2-5 per cent growth.
Coming off the back of strong retail sales growth in September, and with interest rates again being maintained at a record low 2.5%, retailers may well have good reason to carry high expectations into the festive trading period.
However, consumer confidence remains a fragile proposition and, with weak wages and jobs growth a concern, the outlook is restrained, Deloitte found.
This year may see less discounting than in previous years, with Deloitte noting 49 per cent of survey respondents expect to grow margins during the Christmas period, signalling a shift away from slash and burn discounting.
“There will still be bargains to be found, as two thirds of retailers have said they plan to discount at some point over the Christmas period,” commented David White, national leader of Deloitte’s Retail, Wholesale & Distribution Group.
“But consumers will need to hunt harder for those bargains, or be well connected to what retailers have planned, in order to make the most of the opportunities on offer.”
Online sales are on the rise, however Deloitte found for many retailers progress in this area still appears to be slow.
While 83 per cent of retailers are predicting higher online sales than last Christmas, of which 51 per cent are expecting 10 per cent growth in digital sales, this is still off a low base, with digital representing only 2 per cent or less of total Christmas sales for 46 per cent of those surveyed.
White noted online retail remains a “significant opportunity” for many Australian retailers.
“Adapting business models to better service consumers means considering everything from how to use social media as a sales channel, boosting data analytics capabilities and strengthening cybersecurity measures,” he stated.
“We are also seeing retailers recognise the power of digital and cloud technologies to create and empower a connected workforce, better able to serve and adapt to the needs of the connected consumer.”
While Australian retailers harbour concerns about international retailers moving into the local market, when it comes to perceived barriers to sustainable growth consumer demand was the primary concern for 49 per cent of respondents.
Concurrently, many Australian retailers have an eye on international expansion, with 31 per cent stating they see overseas expansion as an opportunity to grow their business in the next 12 months.
Domestically, 70 per cent of retailers say they expect to increase store numbers in the 2015 financial year, (up from 55 per cent last year), with 84 per cent expecting an increase in earnings.