Don’t bury your head in the sand; things are looking dire out there. Non-food retail numbers softening, in some categories such as household goods at alarming rates. The worst could be yet to come with a report by the Reserve Bank saying more families than ever are under financial stress. According to the report, 5 per cent of owner-occupier households are already struggling to meet mortgage repayments and essential expenses. And there’s still about 20 per cent of homeowners yet to come off
o come off low fixed rate mortgages and get slugged with the extra repayments most of us are already dealing with.
No surprise then that consumer confidence remains at record lows, albeit with some fluctuations.
Black Friday this year will be aggressive and suck a lot of demand forward, putting more pressure on the traditional Christmas selling period.
Last year, Black Friday sales saw November retail figures up by 1.4 per cent, a new record high. Clothing, footwear, furniture, and electronic goods all enjoyed the spoils.
Then along came December and retail sales took a dive of 3.9 per cent.
There’s no doubt in my mind that we’ll see a similar trend this year.
Australian Retailers Association CEO Paul Zahra has already warned retailers to “anticipate a bargain-driven Christmas shopper” and that “overall Christmas spending is in decline.”
Couple that with reports Australian online spending has seen a $2.9 billion year-on-year decline and it’s all sounding pretty grim whether you’re a bricks-and-mortar brand or an online pure play.
The smart retailers already know Christmas won’t be the boon shopping season we saw in times of old. Remember those days when rivers of cash flowed down the Bourke Street Mall past Myer’s Christmas windows?
Most retailers are already gearing up to be discounting well before Boxing Day rolls around.
I made a similar prediction last year and I’d argue this may well be an entrenched change to the Australian retail landscape, at least for another couple of years.
Last year I mused about the Americanisation of our retail sector and the introduction of the post-Thanksgiving tradition of Black Friday sales. According to Google Trends, Black Friday sales didn’t become an Aussie thing until 2017.
Six years and 12 interest rate hikes later, Australian shoppers are giving thanks to their American mates for rustling up a discount or 20 for them, provided they get off their arses and do their Christmas shopping in November. Which plenty of them will, given the financial incentives and the advertising avalanche they’re about to experience.
On the side of the retailers, margins will simply have to suffer. There’s no other way around.
The best course of action is to accept it, plan for it, and don’t stick your head in the sand while you hope for the best. The best isn’t coming. Not this year. I’d be hesitant to suggest it will be the following Christmas.
That said, being on sale doesn’t mean things need to be all blood and guts. Why not have some fun with it? Let your personality shine through.
Engage potential customers with an idea and pleasantly surprise them with keen prices to close the sale.
It’s better than getting stuck with excess stock. Turning what you have into cash will keep the wheels of the business turning. You can then take that cash and redeploy it to make a better margin another day.
If you’re not sure how to make the most of the situation, check out what retailers like JB Hi-Fi are doing. I’d wager they’ve got a solid game plan in the works.
