Electronics retail giant Gerry Harvey has said Amazon would be “idiots” if they rolled out a new retail offering in Australia before Christmas, but with promises from the global juggernaut it will launch “really” soon, Australian businesses are staring down a competitive festive season.
Speaking at yesterday’s Harvey Norman annual general meeting, Harvey asserted his company had a unique war chest to use against Amazon, including the power to price match on products.
Fairfax reports Harvey said Amazon should be launching in February or March, and doing so sooner is just “crazy”. He said the company would be “idiots” to launch this month.
However, all signs point to an imminent launch with products beginning to be listed on the Amazon Australia site.
Against this heated backdrop, economic data is painting a picture of conservative consumer spending in the lead-up to Christmas.
As the festive spending season kicks off, here’s what the numbers suggest December could hold for businesses.
The size of the spending pie
Last week the National Retail Association predicted Australians will spend $48 billion between now and December 31, led by more than $15 billion in spending across NSW.
However, consumer sentiment figures suggest despite business confidence bouncing, the passion for spending has been downbeat throughout 2017. November’s Westpac-Melbourne Institute survey saw sentiment dip into negative territory, with a 1.7% decline over the past month.
Just 11% of respondents to the Westpac survey said they were anticipating spending more during this time of year compared to last year, with Westpac economists observing this points to “moderate” spending activity over the coming weeks.
The challenge for retailers
Other recent data suggests while Australia’s business sector is seeing a confidence bounce, retail in particular is lagging behind.
NAB’s November economic data highlights that retail sales have been flat since September, with growth in online retail also slowing as Christmas approaches. NAB’s online retail sales index fell by 0.6% compared with last month.
“We are now forecasting household consumption growth of just 0.4% q/q in Q3, with growth in services spending a little more resilient than retail,” NAB economists reported.
Despite the slowdown, not all in the retail sector are pessimistic. Speaking at Kogan.com’s annual general meeting this morning, founder Ruslan Kogan said while the way customers are spending is changing, there is still plenty of scope for success.
In Kogan.com’s first full financial year as a listed business, it increased revenue by 37.1% to $289.5 million, citing a focus on building a portfolio of private label offerings, including a mobile service.
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“There’s no doubt that the way people buy goods and services in Australia has undergone significant change in the past decade. It’s a wave of change that continues with great pace and we are proud to have played a key role in it,” Kogan said during a presentation in Melbourne this morning.
Food set to soar
One sector where growth is expected to continue in coming months is food delivery, with the numbers suggesting Australians in capital cities will be happy to fork out hundreds for meals over the festive period.
Analysis of 200,000 consumers through personal budgeting app Pocketbook reveals spending on so-called “new” delivery services, like Deliveroo and UberEATS, is up by 61% a month compared with 18 months ago.
While customers using these services in November 2015 were spending on average $49 a month on delivery meals, by June of this year they were spending $80 a month on average.
The Pocketbook team highlight that consumer expectations about delivery mean more and more are electing to spend money in this format, with one in ten Australians now signed up to and using a food delivery app, a 50% increase from 2015.
No delivery service? Personalisation is key
Strategist at Retail Oasis Pippa Kulmar tells SmartCompany that against the backdrop of fierce retail competition and customer expectations for online shopping and delivery, smaller businesses must focus on the “human touch” at this time of year.
“You have to give something that simply can’t be replicated online,” she says.
Foot traffic is a top priority for smaller operators, but Kulmar warns against driving this solely through sale offers and cut-price deals.
“Everyone has to shop for Christmas gifts – think about that before you offer that forty percent off,” she says.
For businesses that don’t have the capacity to run online stores or deliveries across a short time frame, the focus should be on making your offering as personalised as possible.
Beyond the customer service element, this includes thinking about ways customers can customise their purchases in-store.
“Everyone is looking for that personalisation. You might have a guest artist in store, you might have a focused event. Think about the personal shopping element. It all has to come back to service.”
SmartCompany contacted Harvey Norman for comment but did not receive a response prior to publication.