With the industry performing quite well this year, retailers remain optimistic that the upcoming Christmas trading period will do the same and boost those all-important profits.
According to Deloitte’s 2018 Retailers Christmas survey, 80 per cent expect to see higher sales this festive season compared to last year, with 41 per cent predicting growth of five per cent or more.
“Broadly speaking, our retailers are optimistic,” says David White, national leader of Deloitte’s Retail, Wholesale & Distribution Group.
“The overall market has performed relatively well in 2018 and, in spite of competitive and economic challenges, they appear to be carrying this optimism forward into the Christmas trading period.
“They expect to increase both their sales and profit margins compared to last year, pinning their hopes on two key areas in particular―a strong product mix, and an uptick in online sales on the back of investments they’ve made in omnichannel business models.”
Indeed, 79 per cent are expecting to experience growth of 10 per cent or more in online sales.
“Australia might finally be seeing the true acceleration of online retail that other developed markets have already experienced,” White says.
“We’re undoubtedly seeing a local shift to similar business models―it’s just taking more time.
“Of course, that doesn’t mean the physical store is in need of life support. The role of the store is changing away from just being a transactional space to an opportunity to build brand through an experience and service that can often only be achieved face-to-face with the customer.
“Customers can expect to enjoy more innovative store designs and concepts this Christmas, as retailers experiment with new ways to build brand and connect.”
This optimism seems to be continuing into 2019, with more than 90 per cent expecting to see positive sales growth.
Interesting, considering the prospect of falling house prices, higher interest rates, rising energy costs, and a weakening dollar.
“Over half of our survey respondents expect consumer confidence to decline in the next 12 months, but more than 90 per cent expect to see positive sales growth in 2019, and nearly a third are predicting growth in excess of 10 per cent,” says White.
“The role of the store will continue to be a critical part of retailer strategies, but it seems they are confident their investment in digital will provide the impetus to drive their growth prospects in 2019.
“Amazon has set the cat amongst the pigeons, bringing scale and capabilities that have the potential to strike in those areas in which Australian retailers are most vulnerable. Opinions remain divided on the size and timing of Amazon’s impact, but this Christmas will give us a better idea of just how much progress they’ve made.”