A very Covid Christmas

Christmas is always a hectic time for the retail industry. Many businesses do the majority of their trade in the last few months of the calendar year, and while there is always an air of desperation around what the holidays will bring, 2020 felt different. The stakes were high, and it felt like the industry was operating in a do-or-die game of chance. And judging by early sales reports, the industry survived. “For a while, it wasn’t clear what Christmas would look like, p

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stmas would look like, particularly in Melbourne,” Jason Pallant, senior lecturer of marketing at Swinburne University, told Inside Retail.

“The fact that most stores were able to open is fantastic, and I’m hopeful that Christmas and the subsequent sales have bolstered our retailers,” he added. “[I also hope] they have taken some lessons from the disruptions of last year and will be better equipped for further challenges.”

The Australian Retailers Association (ARA) and the National Retailers Association (NRA) both predicted a strong holiday season following a challenging year.

The NRA suggested Aussies would spend $52.4 billion during the Christmas period, including $5 billion online. The ARA predicted $54.3 billion. While the actual figures won’t be known until the Australian Bureau of Statistics releases its December figures in a few weeks, preliminary signs are good.

“Early numbers would suggest that retailers have enjoyed a bumper Christmas period, but that’s been predominantly driven by the categories that [saw strong growth during 2020],” Accenture’s Michelle Grujin told Inside Retail.

“Food and household goods have been pretty consistent throughout the year, and in the lead up to Christmas, it was clear the concept of cocooning is here to stay. I think personal safety is top of mind and people planned to shop earlier [to avoid crowds],” she added.

The big retail story of 2020 was how online went from being a subsidiary part of many businesses to the life raft keeping them afloat, mainly due to customers either having their movement restricted or wanting to avoid public spaces. This trend played out across the entire holiday season.

Grujin said retailers may need to look as far back as Black Friday to account for sales made during the holiday period. The overwhelming move to online kicked the sales event into a higher gear in 2020, and the reality of a new wave of Covid cases put a dampener on Boxing Day sales.

The typically bustling CBD streets were empty for much of Boxing Day, while regional centres and online stores took centre stage.

“We saw fewer people going through bricks-and-mortar environments and more transacting online,” Grujin said. “Given the uncertainty around when the next disruption will come, those that have been able to tap hard into their supply chain capabilities have been able to respond to that volatility.”

Retailers will likely need to rethink the way they focus on their bricks-and-mortar offering, she added. With rent as high as it is, and online retail as popular as it has become, the role of retail real estate is likely to become a topic of conversation in board meetings across the country this year.

Pallant agrees, noting that one big lesson from 2020 is for retailers to not rely heavily on foot traffic to support their business. Alternatively, they should find new ways to bring customers into stores.

“One lesson for retailers is needing a compelling reason to visit a specific location and not relying on them already being there,” Pallant said.

“[And] the second lesson from that is not to disregard suburban or regional areas. We’ve seen foot traffic in most CBD and major centres decline as consumers have been limited from working in central areas, and [regional centres] will have continued importance in the future.

The lessons learned from 2020 will be increasingly important in 2021 – a year partner at The General Store Danny Lattouf told Inside Retail could be the most unpredictable in recent history.

“[There’s] more complexity than ever to accurately forecast and budget, paired with the requirement of earlier and sharper planning required due to supply chain challenges around the world and the high likelihood of ongoing lockdowns,” Lattouf said.

“I think retailers did a great job of aggressively making the most of this Christmas trading period, knowing that beyond March the predictability of the economic climate gets quite tough.”