At least 70% of Australian retailers are expecting higher sales this Christmas than in 2016, research from Deloitte reveals.
The Deloitte Retailers’ Christmas Survey showed that this was down from 76% last year and only 42% expect growth over 2% compared to 54% in 2016.
Deloitte retail, wholesale distribution group national leader David White said that while consumer spending had remained stable this year, competition for share of wallet remains intense.
“A number of retailers haven’t survived the year and there is a concern amongst respondents that weakness may continue throughout Christmas 2017.
"“With so many new and expanding competitors in the market combined with price deflation and rising electricity costs, it will be a challenge for retailers in the apparel, footwear and department store sectors to maintain margins over Christmas in the face of these headwinds."
Amazon has continued to cause concern for retailers, ahead of its official launch, with 17% of survey respondents citing the giant as their biggest source of new competition.
Despite this, 39% of retailers also believed Amazon would have a positive effect on business, compared to 33% believing otherwise.
White said there was no doubt that the greater channels to market created by Amazon would provide further opportunities to local retailers.
“Amazon presents both a challenge and an opportunity for local operators. Overseas, its domination of online retail has forced many retailers to adapt and find innovative ways to connect and build two-way communication with customers.
"The Australian market is not isolated; retailers have been quietly innovating as the competition heats up locally.”
White also said that sales periods were set to shift this Christmas, with 21% of respondents stating they would commit to a no discounting policy.
A further 21% of retailers that planned to discount will use this period to clear Christmas stock.
“During Christmas 2016 we saw many retailers pay the price for heavy and early discounting, with first-quarter sales in 2017 proving to be a challenge for many.
"There seems to be a clear determination not to fall into the same trap this year.
“Traditionally, specialist retailers have taken their cues from the major department stores in hitting the discount button. With department stores rebuilding after a number of difficult years perhaps the hope is the trend of early and deep discounts will begin to reverse this year. Time will tell whether retailers stick to their guns.”
The number of retailers expecting online sales above 6% has increased from 36% to 52%, with 31% of those respondents (versus 14% in 2016) believing online sales will be more than 10% of total sales for the period.