Gifts for the upwardly mobile

Retailers hoping for a merry Christmas are betting smartphone and tablet technology will do the trick, writes Eli Greenblat.

By · 7 Dec 2013
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clock 7 Dec 2013
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Retailers hoping for a merry Christmas are betting smartphone and tablet technology will do the trick, writes Eli Greenblat.

The "tip-tap" of someone tapping away on a mobile phone is certainly less jolly than the tune of sleigh bells or a chorus of carol singers, but the unmistakeable beat of fingers rapping against a touchscreen is rocketing up the charts as shoppers make it a very mobile Christmas this year.

Retailers, both those lumbered with bricks-and-mortar stores in shopping centres and suburban high streets as well as the aggressive vanguard of online players, have realised for a long time the importance of the web to a shopper's arsenal and are now having to contend with the latest consumer weapon - the mobile phone.

Pick up a Christmas catalogue and you will spot the proliferation of QR codes, those funny-looking square blotches that look like a creation that should hang on the wall of a modern art gallery. The tags are also slapped across bus shelters, billboards and store windows.

This is all about retailers reaching out to consumers this Christmas while they are on the go, and hoping their mobile phones, always within easy reach or attached to their ears, will zap away at a catalogue, billboard or poster and push them to making a quick, impulse purchase.

New research from PayPal, one of the biggest pipelines in cyberspace for shovelling money back and forth, predicts a 60 per cent spike in Christmas purchases this year executed via a mobile.

While last year one in five transactions at Christmas time were on mobile device, PayPal now believes one in three will be bought on an iPhone, tablet or similar mobile device. But that does not mean retailers can let their store presence slip; Christmas decorations, window displays and in-store marketing are still crucial.

"It's definitely a mobile Christmas, but by the same token over 70 per cent of people still look for the in-store environment as their main source of shopping inspiration," says Claire Summers, an entrepreneur whose start-up company Wish Registry helps marry bricks-and-mortar stores and mobile social media to create a present registry for friends and family.

"Most people want to share their shopping ideas, and when asked what do we want for Christmas we send emails and take photos," she says. "People will shop online and view items but for a lot of people they use it as a research tool ... and will still walk into a bricks-and-mortar store to make a purchase."

For retailers, it is just another sales platform to get their head around, more bottomless pits for IT and marketing department budgets and ultimately a means to an end to scoop us as much Christmas cash as possible.

And the stakes are huge. Australians are primed to spend more than $28 billion this year, up 2.2 per cent from last year, and for retailers across the country it is a make-or-break time of year that will either send them into 2014 with cash in their tills and wind in their sails or to potential ruin if the holiday sales do not turn up.

Retailers are clutching at every trick in the book to get consumers to open their wallets.

"One thing I'm very confident of at the moment is that people are still very purposeful in their shopping. They have got a mission and are purposeful in how much they want to spend as well," says Richard Goyder, the chief executive of Wesfarmers, whose portfolio of retail chains includes Coles, Kmart, Target, Bunnings and Officeworks. "It's a challenge, but a challenge we are up for. If you go to shopping centres today you will see there are a significant number of people who are in the stores and our big job is to make sure our offer on every front - service, product and price - is spot on."

But retailers are finding it increasingly difficult to get a fix on the state of mind of the average shopper. They have been buffeted by waves of both positive and negative news that has dragged them to and equally away from the shops.

While interest rates and unemployment remain low, giving a big tick in a series of important boxes when it comes to consumer confidence and the willingness to spend, the ending of political uncertainty with September's federal election has not delivered the boom to retail that some analysts had tipped.

NAB chief economist Alan Oster said retail sales, which historically have risen 30 per cent in December, were looking on the soft side despite an unexpected lift in October retail turnover.

Mr Oster says the stakes for retailers over the next 20 days are extremely high.

"It's so important for retailers to do well at Christmas because if they don't they are stuffed, basically.

"You just have to wait and see. The ability is there [for consumers to spend, but] whether people do or not I'm just not sure."

Mr Goyder, with his eyes cast over some of the biggest retail chains in the country, agrees the leaves are difficult to read. "People are still holding off a bit until closer to Christmas and so the next few weeks will be important, but it's hard to tell at the moment.

"It's a little bit patchy, and it's hard to call, that's where my head is at the moment," says Gary Perlstein, boss of Specialty Fashion Group, whose women's chains Millers and Katies represent affordable fashion and will be a key litmus test for spending trends this Christmas.

"Our customer is still cautious. Since the election was called earlier this year, it added to a whole lot of uncertainty. Even though interest rates are down ... there is a lag affect. So much for the talk of a change of government changing that."

Commonwealth Securities economist Savanth Sebastian is slightly more upbeat, but is not calling a return to boom times just yet.

"There is a good chance of a lift in activity compared to prior years. I think if we look at business and in particular consumer confidence, they've tracked significantly higher in the last couple of months, particularly after the election," he says.

"It seems to suggest there is a momentum shift taking place and a pick-up in activity, so it should translate through to a better Christmas period.

"The stronger housing sector and sharemarket will add to the household confidence story. Superannuation is looking better and that certainly will support higher sales as well."

Nick Abboud, whose mid-cap retailer Dick Smith listed on the Australian Securities Exchange this week, is hopeful Australians will spend up on electronic gadgets, TVs and computer games to place under the Christmas tree this year. The release of the PlayStation 4 was perfectly timed to turn cautious shoppers into happy consumers.

"We are seeing positive signs. What's good is in the tablet market, [is] there is more stock available this year versus last year, so that allows us to sell more tablets," Abboud says.

"And once every couple of years there is a gaming launch. We have got PlayStation 4, which is already sold out for us ... the next batch [is] due middle of December, and that's pretty much sold out as well."

He says the macro-economic environment supports stronger spending at the shops this holiday season.

"If you look at what's happening structurally in the external market, that's positive versus last year, interest rates are lower, and you've got the housing market heading in the right direction against 12 months ago - they are two important things."

And of course Dick Smith is armed to take advantage of the mobile Christmas.

"On our catalogues we have got the QR codes and so we have seen an increase in people just scanning off the catalogue pages, and online we are seeing some record numbers come through there as well."

We should know by early January how the retailers have performed and in turn how consumers are feeling. Jobs and growth will hang on the outcome.

Christmas spree

■ Shoppers expected to spend $28 billion in lead-up to Christmas, up 2.2 per cent

■ Rise of 60 per cent expected in Christmas purchases made via mobile phones

■ ABS reported better than expected retail turnover for October, up 0.5 per cent

■ Interest rates and unemployment are low, housing prices are strong but shoppers still cautious
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