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Message from the CEO: 14 February 2017

February 14, 2017

Last week the Australian Bureau of Statistics (ABS) released its retail trade figures for the month of December 2016 and the results demonstrated that the National Retail Association was close to spot-on with its Christmas trade period projection.

In November, we forecast that for the Christmas trade period – which encompasses half of November and all of December – that retail sales would come in it at around $46.5 billion.

We are delighted to discover that the actual figures for the Christmas retail trade period ended up coming in slightly higher at $46.58 billion, meaning that Australian shoppers on average spent more than a billion dollars a day during the Christmas period, a record amount for the retail sector.

While the seasonally adjusted figure for December showed a slight contraction of 0.1 per cent, there was also an overall increase of 0.9 per cent for the December quarter, which should bode well for when the next round of GDP figures are released.

The figures also show that online retail is continuing to grow in prominence, having almost doubled in original turnover between December 2013 and December 2016. What we are currently seeing is the continued role of digital disruption in retail. For instance, in the five years from December 2011 until December 2016, Australian retail sales for newsagents and bookstores has fallen by 23 per cent. Despite this, however, overall retail sales for the same period have increased by 22 per cent. During this period retail spending has occurred a lot more in categories such as hardware, takeaway food and cafes, and combined these 3 categories have experienced a 35 per cent increase in sales.

Digital disruption does not necessarily pose a threat to traditional bricks and mortar retail, indeed it can complement it. For example, consumers may search for a product they want online before going to a shop to purchase the product. Likewise, there’s every chance that a customer will use a retail outlet’s website to find where the nearest store is to buy what they are after. A key challenge going forward for bricks and mortar retailers is to find ways to integrate digital technology in order effectively assist their business, but this is really about redefining the rules of engagement with our customers.

Bricks and mortar retailers are really learning to embrace new techniques for attracting consumers and where successful, their relationships with their demographic appear to be stronger than ever. A great example of this is the technique of neurological pre-emption, which connects a consumer to a brand even before they visit a website or a store. Studies have shown that where a brand gets this right, they are able to increase profit because the connection to a brand is so great consumers simply walk past a competitor or do not even consider deviating their choice.

We have also seen many of our members embrace bringing the store to the consumer, via buy local campaigns and pre-emptive distribution. This model does not just work with small and medium size retailers that are often positioned in our neighbourhoods but now large retailers are changing their offerings and providing pre-emptive access via small freestanding stores as well. The ability to provide a convenient solution via pre-emptive distribution means that retailers are really adapting to combat online. It is certainly an exciting time to be a part of our industry!

Have a great week!

Dominique Lamb
CEO


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