Muted ringing of the festive cash registers

THERE has been no Christmas miracle for Australia's embattled retail sector, with the traditional shopping season doing little to shift downbeat forecasts for the year ahead.

THERE has been no Christmas miracle for Australia's embattled retail sector, with the traditional shopping season doing little to shift downbeat forecasts for the year ahead.

Retailers reported good, but not great, Christmas sales as thrifty consumers looked for bargains online and in shops.

"I think it's going to continue to be gloomy for at least the first half of the year," said Margy Osmond, chief executive of the body representing big retailers, the Australian National Retailers Association.

"I think we're going to see more impact in the discretionary spend areas from online.

"I hate to say it, but I think we're going to see some more reasonably high-profile failures."

She said sales growth in the Christmas period would "probably sit at around 4 per cent".

"While that sounds OK, it's not really, because decent growth is 6 per cent and we haven't seen that for a very long time," she said.

According to the ANRA's yearly survey of shoppers in the lead-up to the Christmas rush, 59.4 per cent planned to pay with cash. This is up from 58.7 per cent last year.

"It all fits the mindset of a very conservative consumer - that they're not interested in a huge amount of debt," Ms Osmond said.

Russell Zimmerman, executive director of the Australian Retailers Association, which represents smaller retailers, said solid trade during Boxing Day sales did not represent a reversal of the weak consumer confidence that had plagued Australian retailers this year.

"I think it's more about the fact that they've got an opportunity to get goods at very discounted prices and . . . I don't know that the confidence has returned yet," Mr Zimmerman said.

"Someone said to me in the lead-in that they've had a good Christmas, but not a great Christmas. I think that sums it up. I think that's how we are going to go into next year, remembering that at some stage next year we are going to have an election, and elections always slow retail down."

Department store Myer this year reported record sales of gift cards and, Ms Osmond said, booming sales of gift cards reflected the conservative mood of consumers.

"What a gift card is perceived as is the ultimate in value because, whatever you pay for it when you buy it, it will be worth more than that in post-Christmas sales," she said.

"So it completely fits the mindset that says cash, that says I'm a bit concerned about the world at large."

Many retailers used their online shops to move Boxing Day sales forward, with some starting to discount as early as Christmas Eve.

Ms Osmond said retailers were reporting a "huge" Christmas online. "I think what you're seeing now is that the biggest online operators in the country are what were the traditional bricks-and-mortar stores, who don't view that as a sufficient offering to their customers any more."

She said the change was driven by customer demand. "That's why you've seen so much change in the last 12 months, and I think you'd be looking at significantly more investment in this over the next 12 months."

The ANRA was expecting $1.8 billion to be spent on Boxing Day, with total spending tipped to hit $5.7 billion after the first week of sales.

A Myer spokesman would not reveal sales or traffic figures from Wednesday morning's rush, but said the company was expecting similar visitor numbers for the day to last year.

"We are expecting around 1.5 million customers to visit the stores today throughout the country, and 200,000 to visit Myer Melbourne," he said.

"This is in line with last year, and we have noticed an increase in people lining up to get into the stores."

Despite heavy mark-downs before Christmas, the retailer was offering additional discounts on certain items on Wednesday. "There are genuine savings to be had," the spokesman said.

Linda Burgess, manager of Highpoint shopping centre in Maribyrnong, which opened at 8am on Wednesday, was expecting about 115,000 customers before 9pm. "So far we are up on last year's figures, so it's looking positive," she said.

Ms Burgess said early traffic figures indicated people still held out for in-store sales.

"It's that instant gratification that customers get on a day like today, which you can't get online," she said.

While some retailers in the centre were already running sales, she said, Wednesday's discounts were "much more significant".

Mr Zimmerman said the initial feedback from retailers was positive.

"Anecdotally, I'm hearing that there's fairly strong selling [on Wednesday]," he said.

"Obviously there was a chance to get involved in the online space over the weekend, and that appears to have worked very well, but I think it's fair to say Boxing Day sales will be as good as they've normally been, if not even a little bit better than they've been traditionally."

Mr Zimmerman believed lower interest rates and gift vouchers, which sold well before Christmas, were driving some of the buying.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Join the Conversation...

There are comments posted so far.

If you'd like to join this conversation, please login or sign up here

Related Articles