Retailers’ Christmas Survey 2020: Stepping out of the bubble has been saved
Retailers’ Christmas Survey 2020: Stepping out of the bubble
19 November 2020: After a long year, retailers across Australia will be counting on consumers safely stepping out of the bubble this Christmas - in store and in the home.
As retailers look beyond lockdowns to the all-important Christmas trading period, Deloitte’s annual Retailers’ Christmas Survey 2020 shows signs of optimism: the percentage of retailers expecting more than five percent growth this year has nearly doubled since last year, illustrating that whilst retail spending will likely be lower in 2020, many retailers are seeing supercharged demand for their products as consumers spend more time at home with the share of wallet for retailers shifting accordingly.
Now in its ninth year, key survey findings include:
- 74% of retailers say Jobkeeper has helped them avoid redundancies during the pandemic
- Strong polarisation in growth expectations: 39% of retailers expect Christmas sales to exceed 2019 by more than 5%; contrasting with 24% who expect them to decline by more than 5%
- 71% expect online sales during Christmas to exceed the same period last year
- The proportion of respondents expecting over 10% of their total sales to be online this Christmas is 44%, the highest in the history of the survey.
A story of sales polarisation
Despite the optimism for some, the survey shows a two-speed retail highway, with some retailers in the fast lane and others seemingly stuck in first. For the first time in the survey’s history, more respondents expect either plus or minus 5% Christmas sales growth compared to last year than all other growth or decline categories. Thirty nine percent of retailers expect Christmas sales to exceed 2019 by more than 5%; contrasting with 24% who expect them to decline by more than 5%. In comparison, in 2019, 21% of retailers expected 5% or more growth, while none expected a 5% or more decline.
David White, national leader of Deloitte’s Retail, Wholesale & Distribution Group, said: “This year’s Retailers’ Christmas Survey reflects the uneven impact of the pandemic on Australian retailers. Some have benefited from border closures and consumers spending more time at home, whereas others in the services, apparel and catered food market have borne the brunt of the downturn.
“The polarisation of the market means that there is not just one narrative around COVID-19 but many. In contrast, whilst a larger proportion of retailers expect margin declines of greater than 2% in 2020 than in 2019 (19% versus 11%), the main margin expectations are relatively consistent to last year. With some of our respondents highlighting that stock availability is an issue this Christmas, margins may hold up even if sales disappoint.”
JobKeeper a helping hand
“Nearly three quarters of our respondents told us that JobKeeper helped avoid redundancies during the pandemic,” said White. “COVID-19 turned normal operating procedure on its head for all of Australia, with retail hit harder than most. Many of the 1.25 million Australians who were employed in February at the start of the year, were stood down during the pandemic due to the closing of stores. JobKeeper has not only supported retail employees across Australia but provided those employees with money to spend in the economy during the hardest-hit period.
“Time will tell whether the reductions in JobKeeper over the next six months precipitates the so-called ‘fiscal cliff’ and what impact this will have on retail spending. Retailers that are doing it tough will be hoping that the JobKeeper taper will be matched by a recovery in organic demand.”
Digital sales critical
“One certainty this holiday season is that digital channels will be critical to success,” White said. “Some retailers may have been caught flat footed at the beginning of the pandemic, but with stores closed, they needed to move quickly. Those who invested in building digital capabilities were able to continue to trade throughout the initial lockdown period of March to May and during the return to Victorian lockdowns in July.
“Looking to the Christmas period, the proportion of respondents expecting over 10% of their total sales to be online this Christmas is 44% this year, the highest in the history of our survey. Seventy one percent expect online sales during Christmas to exceed last year, and over 50% expect an increase in the four weeks to come compared to the past four weeks. Many retailers are already looking to November events such as Black Friday and Cyber Monday to drive online sales ahead of Christmas.
“Many retailers have also successfully used click and collect shopping options during COVID-19 to minimise contact between staff and customers. E-commerce has exploded over the past six months and out of this has come the opportunity to address last mile delivery capabilities. Over 50% of our respondents are confident in their last mile delivery capabilities and retailers are investing in technologies that enable ETA track and trace, dynamic routing, autonomous delivery and pick-up / drop-off networks. This investment is enabling a more seamless experience for consumers. With 32% of respondents highlighting digital and omni-channel capabilities as their most important focus to increase sales, last mile delivery capabilities will be a key priority for e-Commerce this Christmas and beyond.”
But in-store remains the main game
“It is clear the shift to online and digital has been accelerated due to the pandemic, and we can expect this shift to last beyond Christmas,” noted White. “But looking at consumers’ intended shopping channel, instore remains the priority destination, representing an opportunity for retailers to remind consumers that one of the joys of Christmas can be shopping. Over 68% of retailers have identified ‘digital and omni’ and ‘customer engagement and experience’ as strategic priorities in the weeks leading up to Christmas.
“The Australian consumer has more confidence about shopping in-store relative to others around the world, according to Deloitte’s State of the Consumer Tracker, with 72% of Australian consumers feeling confident about going to a store, compared to 61% in the US and 55% in the UK – this is reflective of Australia’s comparatively lower number of COVID cases.”
Paul Zahra, the CEO of the Australian Retailers Association, said: “Overall, we can be enormously proud of how retail has emerged from its horror year in 2020 - achieving any level of retail growth in a pandemic is a truly remarkable result.
“These survey results reinforce trends we have seen across the year, with clear winners and losers within particular retail categories. We can see the effects of the government stimulus across spending trends and retail performance this year – leaving us in no doubt that stimulus works for retail.
“The vibe has certainly shifted towards a recovery – and we are cautiously optimistic about seeing continued positive results from this year’s Christmas trading. At the same time, we are mindful of the pain continuing for retailers within discretionary spending categories including fashion and accessories along with CBD retailers and hair and beauty salons, which have been significantly impacted by social distancing requirements and protracted lockdowns.
“Online shopping including click and collect, is the fastest growing channel for retailers. This is a great result as it means the customer is winning this year for Christmas and enjoying the best of all shopping worlds.”
David White noted that: “The growing unemployment rates, interest rates at record lows and consumer confidence beginning to rebound from the last few months, have given mixed economic signals to retailers as they head into the holiday season. Many will hope that Christmas 2020 brings a welcome respite to the sector, and with the right strategies - digital enablement, customer engagement and a little fortune - this Christmas could turn out to be a cause for some optimism in 2021.
“Notwithstanding the 73% of respondents that have said in-store purchases will remain the most popular distribution channel in the next four weeks, retailers that leverage superior digital and omni-channel strategies as a complement to physical stores, will be the ones the stand out from the pack this Christmas. Those with an integrated and seamless offering that connects the digital, physical and social experience will likely do well, with the hard work done during the lockdowns paying off this holiday season.”