A Deloitte retailer survey has uncovered the opportunities and threats for the Australian retailers in the lead up to Christmas 2022.
The 2022 Deloitte Retailers’ Holiday Survey found that 24% of Australia retailers said December is their critical trading period, down from 37% in 2013. Further, 67% of respondents said they expect to grow sales over Christmas, down from 80% last year. And 58% expect consumer confidence to deteriorate through 2023.
Deloitte also expects that the upcoming Christmas trading period will surge in November this year compared Christmas spending kicking off in early to mid-December a decade ago.
Deloitte’s national leader, retail, wholesale and distribution, Melissa Dean said the theme of this 10-year change is 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,” Dean explained. “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.”
Dean continued, saying the Australian retail industry has had to build resilience in the face of prominent obstacles over the last decade.
“Well-run operators know that even in a shifting landscape, there are still very healthy profit margins available,” she explained. “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. By accompanying customers along their journey and adapting to their shifting needs, retailers will be well-placed for a strong holiday period and beyond.”
Other notable key trends identified in the survey include:
• 58% are confident their logistics teams will meet demand, up from just 29% in 2021
• 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
Survey report contributor and ARA CEO Paul Zahra said most discretionary stores make up to two-thirds of their profits during the “critical” Christmas trading period.
“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,” Zahra said.
“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.”
Zahra said the concern is that the effects from these factors could arise post-Christmas. He noted that when households are under growing financial stress, “discretionary purchases are some of the first things consumers cut back on.”
He further noted that supply chain disruptions and supplier price increase are still problematic, with labour shortages remaining the biggest issue in the current Australian economic climate
“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,” he said. “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.”