Guarded optimism amongst retailers for Christmas sales

Posted by James Ferre on 18th November 2008

Peak retail industry body the Australian Retailers Association (ARA) said new research released today in the ARA Retail Christmas Expectations Survey showed retailers are cautiously optimistic about trading during the holiday season, with 43% expecting sales to be the same or better than last year’s record trade.

ARA Executive Director Richard Evans said the ARA Retail Christmas Expectations Survey indicated over 59 per cent of those retailers who were optimistic about the 2008 Christmas trading season expected sales to increase by between 10 and 20 percent.

“Our research shows experienced retailers understand retailing works in cycles and this downturn in retail trade has come off the back of the most successful Christmas trading period in a decade,” he commented. “So, for over 48 per cent of retailers to be expecting store traffic this Christmas season to be the same or better than last year, shows confidence and an understanding of economic peaks and troughs within the sector. Retailers have had a tough year and they are working hard to boost consumer sentiment and give shoppers the confidence to spend responsibly this Christmas, with over 43 per cent of retailers planning pre-Christmas sales.”

“Retailers will be using point of sale promotions (over 61 per cent), giveaways and competitions (over 25 per cent), giving shoppers some good deals to fill those Christmas stockings. They are also investing in promotions and marketing campaigns in the lead up to Christmas with 67 per cent planning print, television and radio advertisements,” Mr Evans advised.

The Australian National Retailers Association has discovered, however, that Australian consumers still plan to be cautious with their payments from the Federal Government’s stimulus package.

“About five weeks ago we asked consumers how they planned to spend their cash bonus. About 60 per cent said they would save the money or reduce debt,” ANRA CEO Margy Osmond said. “We asked the same question again just after the 0.75 per cent interest rate cut in early November and there’s been no change in people’s spending intentions. Not even falling interest rates has budged people’s thinking – Australians are playing it safe with their money.”

Intentions to spend the cash bonus on entertaining for Christmas (food, alcohol) did rise slightly from 1 per cent to 1.39 per cent. Such figures indicate that food retail sales are unlikely to receive much of a boost, though research around the globe has indicated that food retail sales are likely to be at least as strong as last year.

“Earlier in the year people were worried about rising interest rates and petrol prices. Now their concerns are much closer to home – their jobs,” Mrs Osmond noted. “With unemployment predicted to rise to 5 per cent by June 2009, many Australians have reason to be concerned about their financial security.”

ANRA will conduct another survey before Christmas to test if consumer sentiment about the cash bonus has changed.