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Retailer caution over Christmas: Deloitte

 

Retailers are anticipating a tough Christmas trading period faced with new competitors like Amazon, rising electricity costs and benign inflation.

Even so, a new report suggests shoppers can forget a bargain through pre-festive season sales, with many retailers reverting to the more traditional post-Christmas clear out.

The Deloitte retailers' 2017 Christmas survey of 52 executives and senior management from leading retailers operating in Australia found almost three-quarters of respondents expecting sales to exceed those of 2016, but less than half anticipating growth will be more than a slim two per cent.

"A number of retailers haven't survived the year and there is concern amongst respondents that weakness may continue throughout Christmas 2017," Deloitte's national leader of its retail, wholesale and distribution David White said on Monday.

While over the past few years there has been a shift to earlier and earlier discounting in December, one in five retailers say they are standing firm this year, and a further 21 per cent said they will use the post-Christmas period to clear festive season 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," Mr White said.

"There seems to be a clear determination not to fall into the same trap this year."

But it is not all doom and gloom, with almost a third predicting online sales will be 10 per cent higher than last year and just over half seeing a rise of more than six per cent.

While a third of respondents believe Amazon's official launch in Australia will have a negative impact on their business, 39 per cent think it will be positive for them.

"With the greater channels to market created by Amazon, together with opportunities for retailers to work with them, there are undoubtedly a number of retailers who will stand to benefit from the global retail giant's arrival," Mr White said.

At the same time, despite their cautious expectations over Christmas, just over half of retailers expect their earnings to grow by more than five per cent in 2018.