O come all ye shoppers: Retailers counting on a solid christmas

Michael Baker
Smarter Writer

Michael Baker is a retail consultant and vice-chair of the ICSC's Asia-Pacific Research Council

Michael Baker
Smarter Writer

Michael Baker is a retail consultant and vice-chair of the ICSC's Asia-Pacific Research Council

By the standards of recent Christmas seasons, 2014 is shaping to be solid, if a little unspectacular, for the nation’s Retailers.

trolley

Still the grinches gather

While the retail statistics themselves indicate retailers should be cautiously positive, the noises coming from some industry spokespersons are less committed to optimism.

For example, responding to November’s consumer sentiment data, Anna McPhee, CEO of the Australian National Retailers’ Association (ANRA) which represents a number of large retail chains, weighed in with a slightly confused analysis. “Today’s consumer sentiment figures and consumer Christmas spending expectations haven’t provided the spark to light up the Christmas shopping period retailers were hoping for,” she noted glumly. But then added: “Retailers continue to be optimistic about the way consumer confidence is tracking” (See Anna McPhee’s full commentary here).

While such gobbledygook is not unusual for a trade association spokesperson, Anna’s observations were nonetheless more positive than those of Westpac’s chief economist, Bill Evans. Commenting on the small, 1.9 per cent improvement in the consumer sentiment numbers, Bill noted sourly: “This is an unsurprising but still disappointing result.” He pointed to survey data on consumer spending intentions – itself ambiguous and riddled with problems – to suggest that shoppers might not show up this year (See Bill Evans’ full commentary here).

Amid such negativity, shopping centre industry insiders are somewhat more upbeat. Sales trends have been halfway decent leading into the festive season and the stronger presence of global fashion brands in the Australian market has helped stimulate the fashion market. The recent decline in value of the Australian dollar should also serve to keep more spending at home this summer, since a weak currency discourages buying online from overseas websites.

Hard times at the big end of town

If retail trade has been solid overall this year, there are of course winners and losers. At the big end of town, things are not going well for the department stores and their discount department store brethren. Collectively, these retailers have seen their sales shrink by 0.6 per cent so far this year and for them it is unlikely to be a particularly festive season.

Myer is emblematic of the problems these retailers are confronting – its recent top-line results have been weak to an extent that it’s surprising given the slew of store renovations it has completed this year.

The number of underperforming stores operated by department stores and discounters is an issue that the retail industry will sooner or later need to address, but so far stubbornly refuses to confront. Unfortunately, it will show up again in the numbers this Christmas.

On the other hand, specialty fashion, household goods and food have been faring much better and the good operators in these categories are likely to have a strong holiday season.

Independents vs. chains

Notwithstanding the problems for Myer, Target and the other department stores, chain stores have convincingly outperformed independent operators this year and are in pole position to continue the trend through the holidays. More marketing muscle, greater pricing flexibility and superior locations will all contribute to their superior top-line growth.

The food service category is a clear exception – independent cafes, restaurants and takeaway food operators have collectively had a wonderful year in 2014 with sales growth in the double digits.

But in other categories the suffering for many small retailers continues unabated. Recent sales trends in the fashion sector particularly have been extremely poor, reflecting a continuing failure by independent clothing retailers to adapt to Australia’s new and ferociously competitive fashion landscape. This is likely to be another difficult holiday season for independents, and things will not ease up in 2015.

Customer shopping online
Customer Experience
Customer Experience
5 ways to help prepare your business for online Christmas shopping

Despite COVID-19 restrictions easing, many people might still prefer to shop online instead of in-store this Christmas. Is your business ready to meet the demands of the holida...

Regional Australian landscape
Customer Experience
Customer Experience
Bridging the location gap: How regional businesses are thriving online

As society becomes more digitally connected, technology is helping to unleash the potential of many regional businesses.

Female worker stretching hands above head at workplace
Productivity
Productivity
Why you should choose mindfulness over multitasking

Every minute counts for small business owners, so working on three or four things at once might seem like the best way to get things done. But is multitasking actually holding ...

Business owner uses digital tablet on a farm
Business IQ
Business IQ
Federal Budget 2020: 5 key take-aways for small business

Telstra has teamed up with Small Business Australia to deliver a series of articles and resources to help Aussie small businesses survive and thrive in these challenging times....