Retailers expect to see higher sales this Christmas
“Broadly speaking, our retailers are optimistic,” Deloitte’s national retail, wholesale and distribution leader David White said.
“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.”
Sixty-two per cent of retailers said they want to hold off heavy discounting until after Christmas, essentially saving the tactic for the Boxing Day period, but White cautioned that this strategy will only be effective if customers are enticed by product and not price.
“With shoppers choosing to look and buy later and later each Christmas, helped by continuing improvements in online offerings and faster and more reliable delivery services, the first trading week in December will be of interest interest, and likely to cause at least some jittery nerves,” White said.
Australian retailers may be on the cusp of seeing the acceleration of online retail enjoyed in other developed markets, White said, after significant investment in digital capabilities through 2017-18.
Over half of retailers surveyed are expecting a margin increase, while 79 per cent foresee online sales growth of 10 per cent or more.
The local launch of online giant Amazon has done little to disadvantage Australian retailers, however, with 90 per cent saying the business’s launch hasn’t affected sales, though White said these retailers may not be entirely out of the woods.
“Amazon Australia continues to invest heavily in its infrastructure and people, but it’s not realistic to expect the creation of a multi-billion dollar business overnight,” White said.
“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… so it’s a word of warning – under-estimate Amazon at your peril.”
Retailers’ optimism continues into 2019, with over 90 per cent expecting to see sales growth in the new year, and nearly a third predicting growth of more than 10 per cent – despite over half expecting consumer confidence to fall.
White expects to continue to see the trend of local retailers’ offshore expansion into 2019, as the Australian market becomes increasingly saturated. Over 50 per cent of retailers surveyed currently generate no revenue from overseas, with only a third considering this course of action.
“It’s only a matter of time before they do, and perhaps have to, shift their attentions offshore,” White said.
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