Positive retail sentiment is down as important Christmas trading period approaches: Deloitte

Positive retail sentiment is down as important Christmas trading period approaches: Deloitte
Positive retail sentiment is down as important Christmas trading period approaches: Deloitte


It’s clearly been a tough year for many retailers, with 47% of our survey respondents [in Deloitte's Retailers' Christmas Survey 2019] telling us they’ve experienced flat or negative sales growth over the past 12 months.

So it’s probably no surprise many are also approaching this Christmas with a little less cheer, certainly compared to last year.

Just over 60% are expecting to increase their sales this Christmas, compared to 80% in 2018, and nearly 40% are also expecting to see a decrease in seasonal margins. This is, unfortunately, the most pessimistic we’ve seen retailers since 2013.

Many have pinned their hopes on federal government tax cuts, but the latest trading data suggests consumers have chosen to keep any windfall in their pockets. Retailers are no doubt hoping they’ve been saving up for Christmas.

As always, when to discount and by how much remains a critical decision for retailers over the holiday period. Last year they told us they were intent on holding strong. But with difficult trading conditions 12 months later, this will be challenging, with 39% of retailers planning to discount before Christmas compared to 31% last year, and 30% in early December. 

And with the proliferation of sales campaigns such as next week’s Black Friday leading into December, many are concerned this could bring forward Christmas trading at discounted prices.

Getting personal

The cautious consumer has brought good old customer service back to the fore, as retailers can no longer rely on buoyant spending to drive in-store trade.

Over a quarter of respondents highlighted customer service as the most important driver of sales this Christmas, just behind digital and omni-channel offerings.

These two strategies aren’t mutually exclusive. Forming a strong digital connection with the consumer is critical to building trust in the brand, regardless of where the customer spends, and this connection to the customer flows through to loyalty. 

Over 90% of respondents consider their customer loyalty as good or strong, but brand loyalty is also hard won and easily lost. In the era of cancel culture, retailers need to understand the reasons when things go wrong, and how dealing with a poor customer experience via exceptional customer service can protect, and even enhance, brand reputation and the value this can deliver.

Looking for green shoots in 2020

There are signs of more optimism amongst retailers for their prospects in 2020.

They’re still hoping for the best, with some 72% expecting to bounce back and grow their top line. But with most not forecasting growth in excess of 5%, it still looks like another challenging year ahead.  

New products and online will remain key to growth prospects, and only 11% of retailers are expecting to grow through new store openings, down from a peak of 43% in 2017. 

Rising input costs following the depreciation of the Australian dollar are also expected to bite when it comes to margins, and respondents continue to look to the likes of property costs as levers to reduce bottom line impacts.

It’s certainly critical that within the retail ecosystem, retailers, suppliers and landlords work together, rather than against each other. 

Ultimately, uncertainty kills confidence, and global economic turbulence certainly isn’t helping. Australian retailers will be waiting for a recovery in wage and jobs growth to provide a boost where interest rates and government tax cuts fail to provide the stimulus needed.

Profit AND purpose: big room for improvement

The survey report also looks at Australian retailer views on social impact their operations.

Consumers, employees and other stakeholders are increasingly expecting companies to operate in a responsible manner, from ethical sourcing, using sustainable materials and packaging, and reducing carbon emissions to the fair treatment of employees on pay and conditions and making a meaningful contribution to communities and society more broadly.

In a real concern, 42% of respondents believe social, ethical and environmental responsibility isn’t important to their brand.

Yet in the same breath, 91% believe they enjoy good or strong customer brand loyalty. There’s a concerning perception gap here. If Australian retailers don’t quickly grasp the reality of increasing stakeholder expectations, and respond in a considered, meaningful and, importantly, authentic way, consumers may vote with their wallets, and employees with their feet.

David White is the national leader of Deloitte’s Retail, Wholesale & Distribution Group.

Deloitte's Retailers' Christmas Survey 2019 survey findings include:

  • Only 62% of retailers expect to see higher sales this Christmas compared to last year, down from 80% last year
  • Just under 40% are expecting to see some form of Christmas period margin decrease
  • 39% will be discounting pre-Christmas to help drive sales
  • Digital continues to be a standout, with 58% expecting to see growth of 10% or more in online Christmas sales
  • 72% expect to see positive sales growth in calendar year 2020, down from more than 90% for 2019. 


Retail Deloitte

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