Retailers will avoid last year’s heavy Christmas discounting, but most expect sales to be steady

Retailers will avoid the heavy discounting that accompanied last Christmas season as a warm start to the summer pushes customers into stores, according to predictions from a retail peak body.

Another source of optimism is the end of the election cycle and a perception in business that the new Coalition government will make changes to workplace relations laws, with an eye to reducing weekend penalty rates.

“I’m not here to promote or support a particular type of government,” said Australian Retailers Association executive director, Russell Zimmerman. “[But] I think we’re going to see a government that is a little bit more pro-business.”

Zimmerman’s claims dovetail with the Deloitte Christmas Retailers’ survey of 60 top brass in Australian retail. That report cited several factors that have boosted sales expectations.

Low interest rates and the stability of the Australian dollar at about 80-90 US cents were factors in the high confidence felt by more than half of respondents.

But the survey’s macro-economic outlook stated low expectations for job and income growth in the short term would not give rise to booming optimism, though there are some signs of improvement.

More retailers expected to discount early as compared to last year, but they still make up just a quarter of those surveyed. More sophisticated discounting over Christmas is expected to target specific consumers to increase store entries.

“The days of retailers mass discounting lines of products to try and increase market share are coming to an end,” the report states.

Forty per cent of respondents were expecting between zero and 2% more sales but about 70% expected no growth or a decline to their profit margin over Christmas.

International expansion appears less important to Australian retailers surveyed, with just 20% planning to sell overseas in 2014.

And online sales over Christmas are expected to be small, up to 2% of total sales according to 80% of those surveyed, on the flipside, 55% expected to increase their number of stores in 2014.

Zimmerman said online held huge opportunities for retailers. “I’ve got one of the large chains telling me their online store is doing better than their best bricks and mortar store.”

“I think there might be some SMEs that are struggling with it,” he said.


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