Australian retailers are optimistic about the holiday season, with investments in digital technology expected to pay dividends.
According to Deloitte’s 2018 Retailers’ Christmas Survey released today, 80 per cent of retailers expect to see higher sales this Christmas compared to last year and 56 per cent are expecting to see some form of margin increase.
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It’s a different mood to last year, when trepidation over Amazon’s impending Australian launch had retailers on edge. Fast forward 12 months and 83 per cent of Australian retailers say Amazon won’t have any impact on their Christmas trading performance.
The ecommerce giant’s Australian retail and marketplace offering went live in early December 2017. While it has made strides in expanding its product range, opening new warehouses and launching Prime, Amazon’s operations in Australia are still in “start-up phase.”
According to Deloitte’s research, 90 per cent of the respondents said Amazon hasn’t affected their business since its local launch. Three per cent say it has had a positive effect and seven per cent say it’s had a negative impact.
David White, national leader of Deloitte’s Retail, Wholesale & Distribution Group, said we yet to see the full force of Amazon locally.
“It’s important to learn the lessons from other countries where Amazon has been so successful,” White cautioned.
“Amazon Australia continues to invest heavily in its infrastructure and people, but it’s not realistic to expect the creation of a multi-billion dollar business overnight. So it’s a word of warning – under-estimate Amazon at your peril.”
White said this Christmas will paint a clearer picture of the progress Amazon has made.
Digital pays off
Amazon’s long anticipated arrival spurred on technology investments on the part of retailers, who are now putting their new skills to the test.
“2017 saw a significant increase in retailers strategically investing in their digital capabilities,” White said. “This year, it appears they are looking to reap some reward from these investments, and online is set to be a key sector battlefield this Christmas.”
Retailers are particularly bullish on online retail growth, 79 per cent are expecting to experience growth of 10 per cent or more in online Christmas sales compared to 2017.
The report notes that when compared to other mature markets, Australian online sales are “are still light-years behind” many other mature markets. For example, US shoppers are expecting to spend a staggering 57 per cent of their holiday retail budget via online this Christmas.
“Australia might finally be seeing the true acceleration of online retail that other developed markets have already experienced,” White said.
And stores remain a big piece of the retail puzzle, with 90 per cent of sales are still made through bricks and mortar stores.
“Of course, that doesn’t mean the physical store is in need of life support. The role of the store is changing away from just being a transactional space to an opportunity to build brand through an experience and service that can often only be achieved face-to-face with the customer,” White said.
“The role of the store will continue to be a critical part of retailer strategies, but it seems they are confident their investment in digital will provide the impetus to drive their growth prospects in 2019.”
Deloitte’s lead retail analyst encouraged retailer not to take their foot off the accelerator when investing in technology.
“In the face of increasing competition, retailers now more than ever need to be bold in investing in understanding their customer preferences, how they want to shop and when,” White said.