News Analysis: Australia's retail sector banking on Christmas shoppers to bring relief

Source: Xinhua| 2018-12-21 14:22:19|Editor: Yamei
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by Levi J Parsons

SYDNEY, Dec. 21 (Xinhua) -- While Christmas is a time for family and good will, it is also the most vital part of the year for Australia's retail sector.

For businesses doing well, the end-of-year surge in sales from last-minute shoppers allows companies to finish on a high and bask in their extra revenue.

But for other retailers who are not doing so good, the Christmas holiday rush will be the last chance of the year to salvage a profit and keep their head above water.

MOST MAGICAL TIME OF YEAR

While retailers in general have seen steady growth in 2018, it has not been a particularly strong year for sales.

In the years following the global financial crisis in 2008, Australia's retail spending was averaging around 3 percent growth per annum.

Prior to 2008, the figures were up over 4 percent. But according to the Australian Bureau of Statistics' third quarter data, retail spending over the year to September in 2018 has only ticked up a modest 2.4 percent.

"Household income has been a little bit subdued recently and that ties back to weak wage growth, and that is what's hurting retailers," BIS Oxford Economics senior economist Sean Langcake told Xinhua on Friday.

"We can also see that inflation in turn has been a little bit weak and we can read that as being softer demand on the part of consumers as well as retailers not being able to put their prices up."

But while consumers have been dragging their heels when it comes to spending in 2018, the retail sector are still predicting that after inflation, Christmas holiday purchases will be up around 2.5 percent on last year, equating to a total spending from the back half of November through December, of approximately 50 billion Australian dollars (35.5 billion U.S. dollars), according to the National Retail Association.

For some sellers, particularly those who trade in electronic goods, books and some areas of clothing, December is likely to hold a substantial proportion of their company's overall yearly income.

"There are some retailers that would get a quarter or even up to half of their annual revenue during the busy Christmas period," Deloitte Access Economics Partner David Rumbens told Xinhua.

"For some retailers it can make or break their year."

TRADITION OF BOXING DAY SALES

One of the ways retailers and department stores look to squeeze every last drop out of holiday season is to hold Boxing Day sales after Christmas.

Now a permanent annual fixture in many shopping malls, Boxing Day sales will see hundreds of thousands of bargain-hunters on the lookout for excess stock going cheap.

"Retailers are doing everything they can to get customers through the door," Langcake said.

"Of course, their Boxing Day sales will allow them to shift some extra inventory and hopefully finish the year off with a bang."

Last year on Boxing Day, Australia's retail sector raked in a whopping 2.4 billion Australian dollars (1.71 billion U.S. dollars), with many bricks and mortar stores slashing prices in order to compete with emerging online outlets.

SANTA NOW SHOPS ONLINE

While many shoppers will take the opportunity to head down to their nearest shopping mall, an increasing number of Aussies are avoiding the crowds and shopping online.

Not facing the same cost as traditional bricks and mortar retailers, major online players are now making up a much larger share of Christmas holiday sales.

"The online space is growing far stronger than in store spending, at around 16 percent per annum," Rumbens said.

"However, while there are some retailers that are just online, increasingly those that are in stores are also online as well."

"So it's not so much one competing with the other, it's just different channels for the same retailers."

"Those that we call Omnichannel retailers with both in store and online presences are actually a much bigger part of the online market than online retailers that are only online."

Economists widely expect online sales this year to be the largest ever over the Christmas holiday period in Australia.

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