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Pre-Christmas retail forecast

The latest retail trade figures from the ABS are out, showing a modest boost in September on the month before. Year on year figures paint a significantly different picture, with serious cause for concern over discretionary spend. Clothing and footwear and department stores have fared worst out of all the categories, showing year on year declines of 8.1 and 3.8 russellzimmermanphotoeditpercent respectively.

Russell Zimmerman as the Executive Director of the Australian Retailers Association. Since 1980, he has owned and operated the Spark’s Shoes retail chain with his wife Marion. Spark’s Shoes is a 75-year-old family business specialising in the fitting of children’s footwear. 

Cafes and restaurants have also shown some year on year decline, as well as one of the largest monthly boosts (0.9 percent), which is still a bit of a blow for department stores as they would traditionally expect their wares to be the focus with the new season and some of the more organised attendees of events such as spring racing.

Looking ahead, those retailers relying on the discretionary dollar will be hopeful for a slight spring racing boost, but aren’t holding their breath. Retailers finally received some welcome news at the start of this month when the RBA announced a long- awaited interest rate cut. The rate cut will have given retailers more hope as they head into the festive season that there is a bit more money in the pockets of consumers.

Retailer sentiment leading up to the festive season is so far conservative at best, and might show a ‘once bitten twice shy’ mentality as memories of last year’s Christmas trading period are still fresh in their minds. Last festive season, many retailers involved themselves in a pricing war, putting goods on sale- anything to entice customers to emerge from their homes and take a tentative step into the store.

christmas-shoppingHopefully retailers have had the chance to review their vision between the panic of last Christmas and now. Before the panic sets in again, it is worth noting sales aren’t the only way to motivate customers to come through the door. There are many other ways of getting them through which won’t compromise your bottom line and might even fit better with your long- term strategy.

While not officially collated at time of writing, ARA survey results have come in and show expectations from retailers that the pre-Christmas period won’t be as busy as last year (over 55 percent), and as a result neither will sales, with over 60 percent predicting sales to be “not as high as last year”. November’s interest rate cut may convince some retailers to stick to their bigger picture and find innovative and meaningful ways to get customers doing their Christmas shopping.

A December interest rate cut would of course be the icing on the cake for retailers, as we know most shoppers are out there at the last minute picking up items to go under the Christmas tree or for that work Kris Kringle they almost forgot about. Meanwhile, as we head into November retailers will hopefully be able to rely on the immediate sigh of relief consumers will make as some mortgage pressure is alleviated.

 

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