Optimism breaks through for 2017 after mixed Christmas retail period led by JB Hi-Fi and Myer
Monday, January 9, 2017/
Australian retailers are cautiously optimistic for the year ahead after a festive sales period that delivered big gifts for some, with many brands quick to start chasing the predicted $2.3 billion of Boxing Day sales as soon as they possibly could.
Analysts from Citi last week crowned JB Hi-Fi and Myer winners of the 2016 Christmas season, with JB Hi-Fi chief executive Richard Murray telling The Australian the electronics retailer’s new store at the refurbished Chadstone Shopping Centre in Melbourne booked $1 million in sales on Boxing Day. On November 28, the company also informed the market it had completed its acquisition of The Good Guys, which it purchased in September 2016, with the planned integration to continue in 2017.
Meanwhile, Richard Umbers’ Myer turnaround story was also given positive feedback, with the Christmas pop-up “Giftorium” performing above expectations.
Citi said pre-Christmas trade was lacklustre compared to 2015, but that didn’t completely dampen retailers’ optimism for Boxing Day and beyond. The Australian Retailers Association’s executive director Russell Zimmerman said at the end of last year that he believed the sector would have reached the predicted $2.3 billion in sales that the association had predicted for Boxing Day.
While many retailers are still crunching the numbers for December, one key strategy in the online space was to kick things off as soon as possible. Myer continued the trend of starting its Boxing Day offers online from Christmas Day, while electronics retailer Kogan.com got started as soon as December 21.
“Anyone shopping online has already done all their Christmas shopping for the year,” chief executive Ruslan Kogan said in the last week of pre-Christmas trade.
“That means online retailers that have managed their inventories well have no reason to hold back on their Boxing Day sales. So, we’re ready to go with hundreds of deals we’ve been working hard on securing for our customers.”
Kogan.com picked up the customer database and digital platform of Dick Smith after its collapse in January 2016—a move that its chief executive said added to the sales success of the Christmas period.
“Overall, we’ve had a record Christmas and Boxing Day period. We’ve seen great momentum in sales through both our Kogan.com and Dick Smith channels,” Kogan says.
Getting stock sorted is key
Enthusiasm might have been lacking from some analysts about the retail climate, but smaller operators report they had big ends to the year—and some are still reviewing the details to work out what led to the success.
“This year was the best year so far,” says David Strangis, founder of multimillion-dollar clothing retailer Bronze Snake.
Bronze Snake rarely offers sales and so doesn’t follow a traditional discount model for Boxing Day, but Strangis says the business still saw strong take up of gift cards and many post-Christmas splurges from customers. The company’s strategy was to keep on top of stock and provide shoppers with new things at the right time, which Strangis says worked well for the business. Releasing new items across the end of year period kept shoppers engaged.
“We went really hard on the new stock—we had new stock coming in twice weekly. We think that the fact that new stuff was there [helped],” he told SmartCompany.
“Sales probably go up two fold, especially in December, and we notice that especially with gift cards.”
Online giftware store Hunting For George reports having a particularly strong festive season. The business looked for growth by offering same-day delivery in Melbourne in the week before Christmas to battle a period that traditionally drops off when shoppers go into bricks-and-mortar stores to do their last-minute shopping. The team is still crunching the numbers, but have told SmartCompany sales for December up to Christmas Eve were up 71% on last year.
Cautious optimism from SMEs
The end of 2016 was marked by economic uncertainty, including a news of a budget blowout, but small businesses remain cautiously optimistic about the ability to grow in the year ahead.
A recent survey of 340 businesses from accounting software provider Xero found close to half of business owners are very confident about growth in the next 12 months, with 54% of entrepreneurs getting started on mapping out their own business ventures while still working full time elsewhere.
Meanwhile, the continued focus on boosting online retail sales could mean retailers see shoppers indulging in post-Christmas bargain hunting right through January, Zimmerman believes.
“Boxing Day is only the start of the sale period, and we anticipate this shopping spree to continue for the next two or three weeks,” he said at the end of December.
SMEs are leading the pack when it comes to online sales channels. The NAB Online Retail Sales Growth index, released this morning, highlights that while overall year-on-year growth in Australian online retail has been slowing, small businesses have been able to keep expanding. In NAB’s most recent stats, online retail growth slowed from 14.1% to 13.3% to November 2016. However, sales growth for SMEs is outpacing the broader retail sector and big corporates. The SME index’s year-on-year growth up 25.3% in November.
While almost all Australian retailers vow to strengthen their digital sales channels before the likes of Amazon enter the market, there’s some way to go before traditional product lines dominate the Australian shopping landscape. Roy Morgan’s State of the Nation Retail Spotlight report, released in December, found ticket bookings and travel were the top two products Australians purchased most frequently online. Women’s clothing came in third, while men’s clothing was 10th, and fashion accessories the 11th most frequently bought online category.