Well, by the time you are reading this we will have another Christmas done and dusted, New Year’s sales navigated and the new season’s stock hitting the floor. What have we learnt? What do we need to do to ensure that this critical period for every retailer not only generates sales but profits as well?
Every time I look at the news, talk to a retailer or simply wander the shopping centres and strips, the perception is all the same – where is Christmas? One of my friends jokingly suggested that it was La Nina’s fault, and to an extent they are right. The weather patterns we are experiencing in the lead up to Christmas are literally putting a dampener on the Christmas period! But seriously, when was the last time we had a normal Christmas? We’ve had a Stimulus Package Christmas, a non Stimulus Package Christmas, a wet Christmas and now a gloomy Christmas. So let us briefly recap the last few Christmases.
In October 2008, then PM Kevin Rudd announced a range of measures to stimulate the economy, the first being a lump sum $1,400 payment to eligible recipients. Unfortunately for retailers the news came too late to allow them to do much about it for that Christmas. The result – lots of cashed up consumers spending big but without retailers having the stock to capitalise. Out of stocks became more prominent.
Retailers learnt from that lesson and ordered up big for the following Christmas to ensure they did not run out of stock, but by June it was obvious that consumers were tightening their purse strings and by December there were many retailers in ‘post Christmas Sale’ mode.
Last Christmas the weather was unkind and most clothing and footwear retailers suffered as a result. So what will this Christmas hold? I am writing this before Christmas, so the most recent Retail Trade figures to which I have access are October, but they still give some valuable insights.
To look at what is happening I am going to do what I suggest all retailers do and that is look at a longer time period. Comparison with last year can be very misleading. Trends, and more importantly, patterns show up over a longer time frame. So we will look back at October 2006 to October 2011. (All statistics are obtained from the ABS Retail Trade figures and are based on actual dollars).
The first thing to notice is that over that period the Clothing, Footwear and Personal Accessories (CFPA) classification has grown by 5.0 per cent (the Department Store classification grew by 4.5 per cent). In Western Australia the CFPA classification DECREASED by 12.3 per cent whilst Department stores increased by 8.8 per cent. Given the much publicised booming WA economy, these results are surprising. In the same period in WA, Electrical products increased by 23.8 per cent, Grocery by 37.2 per cent and Take Away and Restaurants by 72 per cent. Victoria was the contrast, with CFPA up by 16.9 per cent and Department stores up by 4.6 per cent.
The lessons we can learn are simple.
1. Performance is patchy across the nation. Planning needs to reflect that.
2. Don’t look at JUST the Christmas 2011 results; examine longer term trends as well.
3. As WA demonstrates, your competitors are not just other clothing and footwear retailers.
4. Develop a plan that is flexible. Remember, the retail environment is never the problem. Not having a plan that allows you to cope with the changing environment is the problem.
Andrew Cavanagh is a former researcher at the Australian Centre for Retail Studies and now operates retail training business Retail Education Services Pty Ltd.
www.retail-education.com