A little less cheer for retailers this Christmas, says Deloitte report

With Christmas just around the corner, retailers are finding it hard to remain optimistic as they are entering the all-important trading period.

According to Deloitte’s Christmas Survey 2019, only 62 per cent of retailers expect to see higher sales this Christmas compared to last year, down from 80 per cent last year.

David White, national leader of Deloitte’s Retail, Wholesale and Distribution Group, says it has clearly been a tough year for many retailers, with 47 per cent of survey respondents saying they’ve experienced flat or negative sales growth over the past 12 months. 

“So it’s probably no surprise many are also approaching this Christmas with a little less cheer, certainly compared to last year,” he adds.

“This is, unfortunately, the most pessimistic we’ve seen retailers since 2013. Many have pinned their hopes on Federal Government tax cuts, but the latest trading data suggests consumers have chosen to keep any windfall in their pockets. Retailers are no doubt hoping they’ve been saving up for Christmas.”

Just under 40 per cent are expecting to see some form of Christmas period margin decrease while 39 per cent will be discounting pre-Christmas to help drive sales. White says when to discount and by how much remains a critical decision for retailers over the holiday period.

“Last year they told us they were intent on holding strong. But with difficult trading conditions 12 months later, this will be challenging, with 39 per cent of retailers planning to discount before Christmas compared to 31 per cent last year, and 30 per cent in early December. 

“And with the proliferation of sales campaigns such as next week's Black Friday leading into December, many are concerned this could bring forward Christmas trading at discounted prices.”

However, looking forward to 2020, there seem to be signs of optimism with 72 per cent expecting to bounce back and grow their top line.

“New products and online will remain key to growth prospects, and only 11 per cent of retailers are expecting to grow through new store openings, down from a peak of 43 per cent in 2017.”

Consumers, employees and other stakeholders are increasingly expecting companies to operate in a responsible manner, from ethical sourcing, using sustainable materials and packaging, and reducing carbon emissions to the fair treatment of employees on pay and conditions and making a meaningful contribution to communities and society more broadly.

“In a real concern, 42 per cent of respondents believe social, ethical and environmental responsibility isn’t important to their brand," says White.

“Yet in the same breath, 91 per cent believe they enjoy good or strong customer brand loyalty. There’s a concerning perception gap here. If Australian retailers don’t quickly grasp the reality of increasing stakeholder expectations, and respond in a considered, meaningful and, importantly, authentic way, consumers may vote with their wallets, and employees with their feet.”