Retailers are more optimistic about Christmas sales in 2016 than those in 2015, according to the latest Deloitte Retailers’ Christmas Survey.

Based on a survey of 52 executives and senior management from leading retailers operating in the Australian market, the research took place during September and October 2016.

Nearly a third (28 per cent) are anticipating sales growth in excess of 5 per cent, compared to 18 per cent in 2015 and none in 2014. 26 per cent are expecting 2-5 per cent growth this Christmas.

David White, national leader of Deloitte’s Retail, Wholesale & Distribution Group says this confidence stems from a combination of a relatively good financial year for many retailers, low interest rates and strong performances in the key sector markets of News South Wales and Victoria.

“Retailers are renowned for their ‘glass half full’ philosophy, and there is a distinct air of confidence amongst many as we approach the peak sales season,” said David White, national leader of Deloitte’s Retail, Wholesale & Distribution Group.

“Certain retail sectors have faced more challenging environments, such as groceries where there has been strong price deflation. Nevertheless, it’s been a positive year for many overall and expectations for Christmas 2016 are good, with most retailers expecting growth in revenue and margins.

“Competition is fiercer than ever, but Australian retailers seem more confident in their ability to rise to the challenge.”

In terms of profitability, the majority of retailers (87 per cent) expect at a minimum to maintain their margins over Christmas. Only 13 per cent anticipate decreased margins, compared to 26 per cent in 2015.

Though online sales continue to grow, retailers tempered expectations about the online share of sales as digital strategies mature. The number of retailers expecting online Christmas sales above 6 per cent has decreased from 47 per cent in 2015 to 36 per cent this year, over 80 per cent still consider an effective digital strategy to be important to their business.

“What we are seeing is a convergence between bricks-and-mortar operators and online,” said White.

Instead of a head-to-head fight with digital channels seeking to replace physical stores, the channels are working together to provide the customer with an integrated offering,.”

A third of retailers plan to begin discounting in early December, compared to 27 per cent in 2015. Some 20 per cent have yet to make the call on when, if at all, they will lower their prices to generate higher volumes.

“One of the critical decisions facing retailers at this time of year is when to discount and by how much,” said White.

“We can expect some early opportunities for consumers as retailers look to avoid being left nervously biting their nails on Christmas Eve. It appears many retailers are prepared to sacrifice some margin early on to ensure they aren’t forced to heavily discount later in the festive period.”

Heading into 2017, the survey found retailers appear positive about their prospects with new stores, new products and online offerings top of mind to drive sales growth. 82 per cent are expecting an increase in earnings over the next 12 months – exactly the same percentage as last year. A third anticipate earnings growth in excess of 10 per cent and 71 per cent intend to increase their store footprint in the next 12 months – the highest seen in the five years of the survey – and 42 per cent expect new stores to be the most significant driver of growth in 2017.

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