Tuesday, June 18, 2024

Christmas comes early as shoppers head back in-store

While 10 years ago most Christmas spending occurred in early to mid-December, the holiday trading period now comes earlier than ever, kicking off at the start of November with Black Friday and Cyber Monday now key dates in the retail calendar.

The big question is how the current economic uncertainty will impact shoppers. According to the 2022 Deloitte Retailers’ Holiday Survey, retailers are (cautiously) optimistic that consumers are ready to embrace holiday spending.

The survey report assesses retailer sentiment for the approaching Christmas period, and identifies key trends, expectations and priorities for Australian retailers for 2023. Key survey findings include:

  • 24% say December is their critical trading period, down from 37% in 2013
  • 58% are confident their logistics teams will meet demand, up from just 29% in 2021
  • 67% expect to grow sales over the Christmas period, down from 80% last year
  • 43% predict this year’s margin growth will be flat
  • 45% expect online sales above 10%, compared to 55% in 2021 – the first time online sales are expected to fall since 2018
  • 76% highlight the importance of ESG to brand perception as the number of “conscious consumers” rises
  • 76% say personalising the retail experience is the key to connecting with customers
  • 48% say data privacy is a high risk for their business as a result of increased customer data collection
  • 58% expect consumer confidence to deteriorate through 2023.

Deloitte’s National Leader, Retail, Wholesale and Distribution, Melissa Dean says: “The overarching theme for Australia’s retail over the past ten years has been a coming-of-age story. It’s a ten-year period that’s seen more fundamental change in the global retail space than any other period in history. It’s when the promise of ecommerce really took hold across the world. It saw the explosion of online retail goliaths and created a booming fulfilment industry. It saw the world reconsider what real-world retail stores are for.

“The Australian retail industry has had to continually build resiliency in the face of the obstacles of the past ten years, and well-run operators know that even in a shifting landscape, there are still very healthy profit margins available. As retailers begin to look past Covid-19, there is a sense that technology, innovation and new business models will allow the industry to capitalise on emerging consumer behaviour and take a big step forward toward defining what the future shopping experience will look like.

“Despite the current economic uncertainties, the Australian consumer still loves to spend and by accompanying customers along their journey and adapting to their shifting needs, retailers will be well-placed for a strong holiday period and beyond.”

Survey report contributor and Australian Retailers Association CEO Paul Zahra says: “The Christmas trading quarter is the most critical on the retail calendar, when most discretionary stores make up to two thirds of their profits. As retailers ramp up preparations for their busiest time of year, the mood is upbeat, but questions remain over the severity of the cost-of-living challenges and how that will impact consumer spending over the festive shopping period.

“Despite the uncertainty, retail sales have been on a record-breaking run over the first half of this year. Consumers have continued spending in the face of rising interest rates and inflationary pressures, which haven’t had an immediate impact on spending. The concern is that it takes some time for those factors to wash through the economy, so we could see some belt tightening and a softening of sales as we head into 2023. When households are under increased financial stress, discretionary purchases are some of the first things consumers cut back on.

“As we lead into Christmas, labour shortages remain the biggest issue. There are over 40,000 job vacancies in retail and many businesses are struggling to trade at their full potential because they can’t get enough people to fill shifts. It means the recruitment of Christmas casuals will be a difficult one, as businesses are already struggling without the high demand of the festive season. Retailers have to plan well in advance – much earlier than they normally would – to ensure they have enough staff to cope with the Christmas shopping rush.”

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