Summer: a great season for convenience retailing

More than three-quarters of Australian retailers* expect Christmas sales in 2016 to exceed those in 2015. In terms of profitability, the majority of retailers (87 per cent*) expect at a minimum to maintain their margins over Christmas. Only 13 per cent anticipate decreased margins, compared to 26 per cent in 2015. Nearly half of all respondents expect to see an increase, albeit modest, in their margins.

David White, national leader of Deloitte’s Retail, Wholesale & Distribution Group says this confidence stems from a combination of a relatively good financial year for many retailers, low interest rates and strong performances in the key sector markets of News South Wales and Victoria.

“Certain retail sectors have faced more challenging environments, such as groceries where there has been strong price deflation. Nevertheless, it’s been a positive year for many overall and expectations for Christmas 2016 are good, with most retailers expecting growth in revenue and margins.

“Competition is fiercer than ever, but Australian retailers seem more confident in their ability to rise to the challenge.”

Mr White comments: “One of the critical decisions facing retailers at this time of year is when to discount and by how much. We can expect some early opportunities for consumers as retailers look to avoid being left nervously biting their nails on Christmas Eve. It appears many retailers are prepared to sacrifice some margin early on to ensure they aren’t forced to heavily discount later in the festive period.

* Data from latest Deloitte Retailers’ Christmas Survey

December in convenience

Insights from 7-Eleven Australia

For convenience stores December also marks the start of a challenging and rewarding period.

During the Australian summer many Australians enjoy holidays from work as well as public holidays such as Christmas Day, Boxing Day, New Year’s Day and Australia Day. This is great news for convenience retailers as, with more people out and about, store traffic increases too.

December is also a key trading period for many convenience stores, as – unlike many other retailers – they’re open throughout the festive season, including all the public holidays.

Christmas themed Krispy Kreme doughnuts added a festive touch at 7-Eleven stores during December 2015.

7-Eleven Australia says its important it has key basic items customers need over the festive season, adding it see strong increase in top items such as take home drinks and snacks, confectionery, and items such as milk, bread, cream, batteries, butter, gravy mix, custard and other grocery lines.

“While the unit sales of some of these products are not huge, the increase is something we need to prepare for as these items are things that a customer would go elsewhere for if we don’t have what they need in-stock,” a 7-Eleven Australia spokesperson  told C&I.

Well before the arrival of summer, it is important to review stock requirements.

Insights from 7-Eleven America suggest that more than one-third of all boxed chocolate sales occur in November and December; consumers purchase more phone cards in December than in any other month; and, battery sales triple in Christmas week (think of all those battery operated gifts).

7-Eleven Australia says it sees strong increases in ice and gas bottle sales. Last year, December accounted for more than 28 per cent of its total ice sales for the financial year.

“We sold more than an Olympic sized swimming pool equivalent of ice in December 2015.”

“So much of the typical Australian Christmas is about celebrating with family and friends outside, at the beach, in the backyard, and having barbeques. Ice and gas bottles are important parts of those celebrations.

“Weather has a big impact on sales, particularly on ice sales, so we plan a few different options to make sure we can keep up with demand regardless of the weather.”

Increasingly consumers are turning to convenience stores for last minute gifts and for festive themed hostess gifts, often en-route to events.

While some of these items can be sourced from regular stock lines, customisation of product and themed stock items add excitement in store and provide that ‘special something’ for customers on a gift-giving mission.

7-Eleven’s Krispy Kreme doughnuts provide a perfect illustration of how stores can customise product to create additional sales. “We include special seasonal doughnuts in our Christmas themed mixed packs, last year we had Santa and Christmas Tree doughnuts, and we find customers take these as gifts and for sharing at celebrations. We sell a lot of our Krispy Kreme Seasonal Gift Packs,” 7-Eleven Australia’s spokesperson said.

Regular stock items such as gift cards, consumer gadgets and boxed chocolates are also good sellers and provide excellent gift opportunities for consumers who need last-minute or pre-planned gifts.

7-Eleven Australia report that they make stock is available to provide customers with last minute gift options, such as gift cards and boxed chocolates. “There’s a good increase in sales, particularly in our range of gift and stored value cards over Christmas,” the spokesperson said.

7-Eleven Australia report that their stores are also busy with coffee sales over Christmas, as convenience stores are often one of the few  places to get a freshly ground, fresh milk coffee on Christmas Day.

Sign up to C&I’s free bi-weekly newsletter here to receive the latest industry news every Tuesday and Thursday. Follow C&I on Facebook, Twitter and Linkedin

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top