It is only Easter but big retailers and mall landlords are already turning their thoughts to their deepening Christmas conundrum as the traditional shopping calendar is ripped to shreds by online retailing and global consumer events.
Events such as the American Black Friday tradition and the world’s biggest shopping extravaganza, the Chinese Singles Day, are being talked up by retail insiders as a way of giving shoppers an ”extra” reason to spend money.
But that is a difficult thing to achieve especially as static wages keep a lid on consumer exuberance. That means Boxing Day queues are much shorter than they once were.
The new events have also been triggered by the arrival of new international brands bringing their own sales calendars and events and allowing Australians to buy through the overseas websites, such as Amazon.
To illustrate the point the next big event sales days for some retailers will not be around traditional “mid-year’ discounting, rather the Autumn Moon festival in October.
“Given we have a very strong Asian and youth demographic, we are seeing sales periods that are quite often aligned with national holiday periods,” says Leigh Dunn, regional general manager, at GPT Group’s Melbourne Central.
“We are directing our marketing spend to supporting those events because we know that if we do it well it will create an additional spending period for retailers.”
Dunn says the events and festivals should not focus on discounting,
“It’s really around people getting together. For us, we’re constantly looking at shopping becoming the outcome not the objective.”
Bill Rooney, the chief executive of 6one5 Retail Consulting Group, says the November shopping event tsunami has pulled forward the traditional Christmas sales period.
“These big events have seen the traditional Christian retail calendar be replaced by the digital calendar,” Rooney says.
“It means the bricks and mortar retailer must now try and keep up and get in early before what was the traditional Christmas sales, which is altering our shopping habits at a rapid pace.”
Last November when Black Friday occurred Australians pumped as much as $400 million in sales through their smart devices and also at the shopping centres.
Black Friday is the post-Thanksgiving sale in the US, where people traditionally spent so much at the stores to grab a bargain, that it puts retailers into the “black” financially.
It is now known as “cyber 5”, where people start buying online and in physical stores, from Thanksgiving, which is always on a Thursday in the US, until the following Monday, known as Cyber Monday.
Retailers and landlords also hope that it will whet the appetite for shoppers to get them in the festive mood to start their Christmas shopping. But data suggests that did not happen.
Citi’s Craig Woodford says shoppers instead shifted December shopping trips online and pulled-forward purchases into Black Friday.
“Discounts were required to get shoppers into physical stores. We estimate overall foot traffic into store from Black Friday to Boxing Day 2018 was down about 9 per cent on this measure,” Woodford says.
Craig James, chief economist at CommSec, says Australians are still spending, but differently and cautiously.
“In the past, December was the big spending month. But Australians – just like their US cousins – are now embracing online sales events held in November. As a result some of the usual Christmas sales have been brought forward to November,” James says.
According to the Australian Bureau of Statistics, retail trade rose by 0.5 per cent in November last year and fell by 0.4 per cent in December.
“In this increasingly more globalised environment, it is clear that Australian retailers need to stand out with an offering that meets needs or provides a better experience than other goods and services– domestic or foreign,” James says.
UBS’s economist Carlos Cacho says the scenario is challenging for retailers.
“The one-off events of Black Friday and Cyber Monday are starting to cannibalise the Christmas sales period,” Cacho says.
“Trying to work out these seasonal factors is causing retailers to work differently and harder coming into Christmas.”
Greg Miles, chief operating officer at Scentre Group, which owns Westfield shopping centres, says Westfield sees these new events permeating the entire retail ecosystem including bricks and mortar outlets.
“They are opportunities to engage with customers. Black Friday and Cyber Monday have become converged retail events that are enhanced by in-store activation and offers, demonstrating the value of physical stores in driving brand advocacy, customer engagement and sales across multiple channels,” Miles says.
Vicinity Centres chief executive Grant Kelley says the speciality sales uplift driven by larger format chains such as H&M and cosmetics giant Sephora, and in-demand specialty retailers, was significant as it showed that consumers were not only motivated by discounting but were seeking out physical brand experiences.
Kelley says that, in addition to the 2.8 per cent increase in sales in February, the strong start to the year followed speciality store and mini majors sales growth in January (4.2 per cent), December (0.4 per cent) and November (3.9 per cent).
“We know Australian consumers have embraced the global ‘Black Friday’ shopping events but, this is not the only driver of change,” he says.
“At Chadstone, we saw a 20 per cent increase in footfall on Black Friday last year, with our retailers reporting strong sales. Christmas traffic also remained strong with traffic for the 34-hour trade prior to Christmas up 3 per cent and Christmas Eve up 7 per cent on the previous year.”
Malls will need to be up for the fight given UBS forecasts that e-commerce will take about 50 per cent-plus of the growth in national retail spend noting that “not all retail space is equal”.
Dunn says that Melbourne Central’s experience is that Black Friday is now a permanent fixture on the retail calendar but that Christmas and Boxing Day will be important.
“I don’t think it will ever truly take away from Christmas and Boxing Day for us was still the strongest day sales wise but Black Friday is close on its heels and I think that’s great. Because once upon a time we only had one day and now we have two days,” Dunn says.
“I think there may be just a slightly different shopper on those two days. One is very oriented to whatever the leading trends are, which is the Black Friday shopper, and probably you will find the traditional shopper is looking for traditional items such as linen, crockery and big appliances on Boxing Day.”
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