19th November, 2020
Could Christmas 2020’s holiday sales be an opportunity for retailers to begin ramping up activity after a tough year of trade?
The holidays can’t come soon enough for all of us after what has been a shocker of a year.
For struggling retailers the lead up to Christmas, and the sales period that follows, is a chance to make up lost sales due to lockdowns and hopefully make a financial recovery by the start of the new year.
Competition between retailers will be fierce in the battle to secure spend.
Shoppers have changed their spending habits and carried out Christmas shopping earlier to take advantage of popular sales events like Black Friday and Cyber Monday, according to research by IBISWorld.
Senior industry analyst Yin Yeoh said retailers are battling against negative consumer sentiment, high unemployment and falling real household discretionary incomes.
“Families are expected to go all-out on their Christmas feasts this year, with many Australians celebrating the ability to reunite with family after states reopen borders and ease social distancing regulations,” said Yeoh.
In good news, the National Retail Association (NRA) predicts that more than $50 billion will be spent by Australians alone, including a record online spend of over $5 billion. NRA chief executive Dominique Lamb said this year’s period will take on added significance due to the tumultuous year following the Covid-19 pandemic.
“Retail has experienced a roller-coaster year, with businesses across Australia forced to navigate lockdown restrictions due to COVID-19,” said Lamb.
“Christmas is the most important period of the year for retail, but in 2020 it will take on added importance due to the current economic downturn. Many businesses desperately need a Christmas sales splurge to keep themselves afloat as we head into 2021,”
“With people unable to travel overseas, the continuation of government assistance measures and a thirst from shoppers to get out of the house following lockdown periods, we’re confident that consumer spend will be solid,” she said.
There’s also good news across the ditch, with Retail NZ reporting strong spending since March, which is now running slightly ahead of last year.
Retail NZ chief executive Greg Harford said overall spending since March is running 0.3 percent ahead of total spending for the same March to October period last year. However the results aren’t shared equally across the retail sector, with some retailers performing well, while a minority is selling substantially less than last year, he said.
“Overall retail sales in October were 20.7 percent higher than last year. This reflects the fact that consumers have money in their pockets, supported by low interest rates and increase in house prices, and that New Zealanders are still unable to travel overseas because of COVID-19,” said Harford.
Retailers that continue to resist the urge to build an online store are set to struggle this Christmas, with online shopping set to soar to record levels.
Research by Paypal reveals that the volume of online Christmas shopping is expected to double (48 percent) in Australia alone, compared with previous years (25 percent) – equalling a year-on-year increase of 90 percent.
Shopping in-store is set to decrease, with respondents saying they plan to do only half (52 percent) of their Christmas shopping in store – a 30 percent year-on-year decrease from Christmas shopping done in store previously. But shoppers are on the hunt for quality over quantity, spending an average of $560 on Christmas presents, down $59 on what they’ve spent in previous years.
The survey, conducted online in a 10-minute survey conducted by ACA Research for PayPal, reveals that Australians are a resilient bunch who won’t let COVID-19 dampen their Christmas spirit.
But they’re rightfully concerned by the virus, with concerns about Covid-19 is driving up online sales. It found that a quarter of Australians (24 percent) claiming they don’t feel comfortable shopping in-store due to crowds this year. These factors are likely driving increased virtual shopping, as 36 percent believe shopping online is less stressful than dealing with crowds in stores.
The PayPal research reveals that 41 percent of survey respondents say they want to support Aussie businesses that are doing it tough post-drought and bushfires. It also found that people are planning to start their Christmas shopping early, prompting Australia Post to announce that December 12 will be the cut-off for parcels to be delivered on time this year.
The national postal carrier is gearing up for what is expected to be the largest parcel volumes in the organisation’s 211-year history, prompting the national carrier to launch a record-breaking recruitment drive to hire an additional 4,000 people to meet growing demand.
“In managing all the necessary COVID-safe requirements, including a reduced workforce in our Melbourne facilities during the recent Stage 4 restrictions, our people have gone over and above to provide critical services for businesses and their customers, and delivered for over 8.1 million households who have shopped online between March and August alone,” said spokesperson Sue Davies.