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Retailers optimistic about Christmas and New Year: Deloitte

Three quarters (75%) of retailers are expecting Christmas sales to be higher than last year, according to the latest Deloitte Retail Review survey. However, the gains are expected to be modest, with no retailers expecting more than 5% sales growth, and 38% expecting 2-5% growth.

The National Leader of Deloitte’s Retail, Wholesale & Distribution Group, partner David White, said, “Despite relatively flat consumer sentiment, low interest rates and cheap credit are helping to boost consumer spending and retailer confidence in the lead up to Christmas.

“However, macroeconomic factors – such as weak wages and jobs growth and the slow-down in China – remain the number one perceived risk to retailers, which is why they are expecting a solid Christmas period, but not a spectacular one.

“On a positive note, there appears to be genuine optimism about 2015. Compared to last year, there has been a 15% fall in the number of retailers concentrating on efficiency and cost control. Instead we are seeing a greater focus on organic growth, particularly through bricks and mortar stores and a greater investment in multi-channel offerings.”

Despite the concerns around economic conditions and consumer sentiment, retailers seem increasingly confident about their ability to manage ongoing uncertainty. Domestically, 70% say they expect to increase store numbers (compared to 55% last year) and 84% expect an increase in earnings in FY15. Almost a third (27%) nominated new sales channels and online as the most significant driver of sales (up from 17% last year).

Speaking to C&I about the outlook for the convenience sector, Mr White said, “Retailers are broadly optimistic about the Christmas trading period, with 75% of respondents predicting higher sales this Christmas compared to last year. With consumers increasingly demanding greater convenience and localised products, this presents a good opportunity for convenience store owners.  In Western Europe and the USA, convenience stores are the fastest growing store format and we are starting to see this trend also emerge in Australia as retailers respond to consumers’ changing shopping patterns. 

“Store networks continue to play a pivotal role for many retailers’ growth strategies, with 70% of respondents expecting to increase their net store numbers in 2015.  This means that convenience store owners can expect to see the competition for good retail store locations continue to heighten.  However, with increasingly mobile and time-poor consumers demanding greater convenience in how and when they shop, those convenience store owners who can secure the right store location at the right price could stand to benefit. Competition, however, will be intense”.

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