It’s shaping up to be a patchy Christmas for retailers with many big retailers set to miss out due to poor product selection and the ongoing growth of online retail.
Citi’s report on Christmas retail published this week, What’s hot for Christmas 2014, records Australian retail spending trends as slowing.
Craig Woolford, analyst at Citi, says the top gift for Christmas 2014 is the “selfie stick” followed by Fitbit Flexs, GoPro cameras and games console bundles.
But Woolford says a lot of major retailers have limited stock of these items.
“Electronics retailers will likely be the only ones benefitting from Santa’s cheer,” he says.
“Unfortunately, Myer and the discount department stores have a limited range in key categories, or uncompetitive pricing to really win Christmas, in our view.”
Woolford predicts dining out and experiences will take the major share of consumers’ wallets.
“ASX-listed retailers will miss out on the growth this Christmas,” he says.
Many major retailers are also set to suffer due to limited online offerings.
Nielsen latest figures show double-digit growth for many online retailers in November 2014 compared to the prior month in the lead up to Christmas.
Among retailers with digital audiences of more than a million people per month, Kmart Australia led the growth story with an additional 447,000 people during November 2014 (+44%), followed by Kogan which gained an incremental 308,000 people (+26%) and JB Hi-Fi with an additional 308,000 (+21%) compared to the prior month.
Russell Zimmerman, head of the Australian Retailers Association, says so far the run up to Christmas is “patchy”.
The ARA has forecast $45 billion worth of retail sales in the lead up to Christmas but the feedback from retailers to date is sales are very dependent on location and categories.
Nevertheless, Zimmerman is optimistic the retail industry will get a boost in sales this Christmas.
“This weekend will be the big one,” he says.
“Christmas often comes in with a very strong burst at the end and I think that will happen this year.”
Zimmerman says the rise in online retail spending “augurs well” for Australian retailers.
“The domestic share of that spend continues to edge higher,” Zimmerman says.
“ Online retailing is also part of Australian retailing and there are lots of good Aussie retailers around that are all part of the retailing fabric of Australia.”
Looking ahead the ARA is predicting shoppers will spend $16.1 billion during post-Christmas sales from Boxing Day through to 15 January 2015.
This would represent an estimated year on year growth of 3.6%.
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
