Just as the silly season was approaching last year, the retail industry was feeling a glimmer of hope. Just a glimmer. The three kings brought gifts of Christmas hope to retailers – the first king brought gold, with some moderate growth reported in the latest ABS figures. The second king brought frankincense by way of a December interest rate cut which will hopefully give people a reason to head to the shops, and the third king brought myrrh in the form of banks passing on that December rate cut in full to customers.
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.
While it seems the stars aligned enough for retailers to see some light, there are also some shadows lurking behind the tinsel, with food being a big reason for the boost, and clothing and footwear as well as department stores proving to be a weak link.
We know times are tough when people are concentrating their spend on food and household goods and not shoes, especially over the festive season when the weather warms up and events and parties sneak into the calendar.
The figures show cause for concern over discretionary spend as consumers hibernate, watching both their spending and their debt levels, highlighting risk- averse behaviour. Banking Day reported towards the end of the year there might be a ‘secular shift’ in the use of credit cards, with a decline in credit card debt over four consecutive months in 2011, which hasn’t been seen since 1985.
Clothing and footwear retailers have traditionally been able to rely on a consumer living in the moment, spending during the good times and saving during times of uncertainty, such as when interest rates rise or new taxes are imposed on them.
But the economy is complex and since the GFC consumers have taken on a conservative approach to spending. Good retailers know they must look at their bigger picture rather than obsess over the day to day habits of a fickle consumer.
That beautiful pair of mustard shoes sitting in the window might experience nothing but wistful looks from passersby for a longer time than usual, but good retailers stay safe in the knowledge that they form part of a larger strategy which knows its customer, has a clearly defined service offering and is able to take risks on certain products and stock enough of their best selling products to keep regular customers happy and spending.
In good news for the fashion industry, some of the most popular Christmas gifts for women this year included clothes, jewellery and cosmetics, as well as beauty. Gift vouchers also featured high on the list for women, and 73 percent of overall respondents said they planned to give either a gift voucher or money to their loved one. We can only hope this means vouchers and extra cash were spent after Christmas on some outfits for the holiday season or to update the wardrobe in time for the warm summer weather.
According to the ARA Consumer Survey, 30 percent of consumers finished their Christmas shopping between 22 and 24 December, showing deep down consumer spending habits haven’t changed all that dramatically yet; and there’s still scope for them to pop in and try on their dream pair of shoes to go with that summer party dress- the budget might just stretch after all…