Retailers are cautiously optimistic about Christmas, survey reveals

There are signs of optimism for retailers this upcoming festive season, with more than a third of retailers expecting Christmas sales to exceed 2019 by more than five per cent.

Despite the optimism for some, Deloitte’s Retailers Christmas Survey 2020 shows a two-speed retail highway, with some retailers in the fast lane and others seemingly stuck in first, says David White, national leader of Deloitte’s Retail, Wholesale & Distribution Group.

“This year’s Retailers’ Christmas Survey reflects the uneven impact of the pandemic on Australian retailers,” he explains.

“Some have benefited from border closures and consumers spending more time at home, whereas others in the services, apparel and catered food market have borne the brunt of the downturn.

“The polarisation of the market means that there is not just one narrative around Covid-19 but many. In contrast, whilst a larger proportion of retailers expect margin declines of greater than two per cent in 2020 than in 2019 (19 per cent versus 11 per cent), the main margin expectations are relatively consistent to last year. With some of our respondents highlighting that stock availability is an issue this Christmas, margins may hold up even if sales disappoint.”

White adds that digital channels will be critical to success. “Looking to the Christmas period, the proportion of respondents expecting over 10 per cent of their total sales to be online this Christmas is 44 per cent this year, the highest in the history of our survey.

“It is clear the shift to online and digital has been accelerated due to the pandemic, and we can expect this shift to last beyond Christmas,” notes White.

But looking at consumers’ intended shopping channel, instore remains the priority destination, representing an opportunity for retailers to remind consumers that one of the joys of Christmas can be shopping. Over 68 per cent of retailers have identified ‘digital and omni’ and ‘customer engagement and experience’ as strategic priorities in the weeks leading up to Christmas.

Australian Retailers Association (ARA) CEO, Paul Zahra, adds that the survey results reinforce trends seen across the year, with clear winners and losers within particular retail categories.

“The vibe has certainly shifted towards a recovery and we are cautiously optimistic about seeing continued positive results from this year’s Christmas trading,” he says.

“At the same time, we are mindful of the pain continuing for retailers within discretionary spending categories including fashion and accessories along with CBD retailers and hair and beauty salons, which have been significantly impacted by social distancing requirements and protracted lockdowns.

“Online shopping including click and collect is the fastest growing channel for retailers. This is a great result as it means the customer is winning this year for Christmas and enjoying the best of all shopping worlds.”

However, White adds retailers that leverage superior digital and omnichannel strategies as a complement to physical stores, will be the ones the stand out from the pack this Christmas.

“Those with an integrated and seamless offering that connects the digital, physical and social experience will likely do well, with the hard work done during the lockdowns paying off this holiday season.”