Seven out of ten retailers see Christmas sales up on 2011DOWNLOAD
14 November 2012: Despite a tough year, Australian retailers are more optimistic about Christmas sales than a year ago, with over two thirds (69%) expecting sales to be higher this season, according to new research from Deloitte, A Time for Christmas Cheer?, Christmas Retailers’ Survey 2012.
The research surveyed 52 senior executives from a broad cross-section of Australia’s retail sector, gauging their perspectives on the current market, Christmas sales, online trends and the outlook for the next 12 months.
Less than 13% of retailers surveyed believe Christmas sales will be worse than 2011. However, there is less optimism around margin growth, with over 30% of retailers expecting no change and a further 34% expecting one to two per cent growth. Almost a third (32%) of retailers expecting to discount plan to do so by early December.
David White, National Leader, Retail, Wholesale & Distribution Group at Deloitte, said: “Lower interest rates and a stabilisation in the exchange rate are providing retailers with optimism around the Christmas period. This is still a tough market though and the low margin expectations indicate that the heavy discounting of last Christmas is expected to continue this Christmas.
“The decision of when to discount continues to be a key factor in business planning for the Christmas period. Too early and potential full price sales are lost, too late and competitors will secure market share.”
Slow shift to online
One surprising finding from the research is that 65% of respondents expect less than 2% of their Christmas sales to come from online. Australian retailers still see bricks and mortar stores as key to their growth prospects. While growth strategies vary widely across retailers and segments, 73% of respondents expect to increase physical store footprints, either through store numbers or floor space. One third (33%) also see new stores as being the most significant driver of sales growth in the next 12 months.
However, there is an expectation of significant growth in online sales, with nearly three quarters of respondents (68%) expecting more than 10% growth in online sales over the next year. One third (33%) of respondents also identified online offerings and new sales channels as their key strategic priorities in the next twelve months.
“Australian retailers’ online sales continue to lag behind those in the USA and Europe,” observed David White. “The investment in online and multi-channel strategies will continue to be a key focus for the retail industry, with innovations such as buy online/pick up in-store and mobile shopping becoming increasingly important to retailers’ strategies in 2013.”
Christmas up, but consumer confidence flat
Despite the cautious optimism for the Christmas period, retailers overwhelmingly expect the market to remain flat over the next 12 months. Almost 70% believe consumer confidence will remain static in the coming year, while 55% believe the performance of the broader Australian economy will stay the same, and a quarter see it deteriorating.
Competitive landscape – old foes, new threats
Retailers see their greatest threats as being the challenging macro-economic climate (19%) and existing competitors (30%). A quarter (25%) cite international online competitors as the greatest source of increased competition, whilst 60% see locally and foreign owned bricks and mortar competitors as a bigger challenge.
“Our research identified a relatively low level of concern around disruptive innovation,” observed David White. “Undoubtedly, traditional risks remain significant for retailers, but there is a danger of being blind-sided, missing opportunities or simply being left behind by the competition if the threats from digital innovation aren’t recognised and fully appreciated early enough.”
The research: A Time for Christmas Cheer? Christmas Retailers’ Survey 2012, can be downloaded from the Deloitte website.
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