19th October, 2021
While there are plenty of ‘green shoots’, retailers will face an uphill battle to making the most of trade conditions at the end of 2021.
Retailers, especially those trading significantly in NSW and Victoria, have had a tough go of things since COVID struck.
Happily, the busy trading time of the year is almost here, and with public health restrictions easing, the next few months provide opportunities for bumper retail trade.
But to make this happen, you need to know how to maximise results in an uncertain business environment.
To help get you set up for success in 2021, this article covers the following:
According to the Australian Retailers Association (ARA) chief executive, Paul Zahra, Christmas is the most critical time on the retail calendar, and this year is shaping up to be particularly important to many retailers.
“It’s when many discretionary retailers make up to two-thirds of their profits for the year.”
But for many businesses, their success over the coming months will hinge on the opening up of markets.
“With Australia’s two largest states subject to prolonged lockdowns, the success of this trading period is dependent on the COVID roadmaps in NSW and Victoria and how businesses can manage a safe reopening when we reach the vaccination targets of 70 and 80 percent,” said Zahra.
Retailers have to manage expectations right now and look for ways to move forward under trying and unpredictable circumstances.
“It’s important that retailers in locked down parts of the country embrace the new normal when they reopen rather than expect a return to business as usual,” said Zahra.
“It’s clear we’ll be living with COVID for the foreseeable future, and health, safety, and hygiene will continue to be priorities.
“Depending on where they’re located, vaccinations may also be a requirement for staff and customers in order for businesses to reopen – and while this presents challenges around compliance and enforcement, retailers have proven their ability to be nimble and adaptable to government requirements, like they have with mandatory mask-wearing and QR codes.”
Zahra notes that the ARA sees positive days ahead.
“Despite the numerous challenges businesses are facing, we’re optimistic it will be a buoyant Christmas trading period. There’s a lot of pent-up demand for consumer spending in locked down parts of the country,” he said.
Savings are high in Australia right now, and travel restrictions have seen people spending at retailers rather than on overseas trips.
“Australians have saved over $228 billion since the start of 2020, and more than $60 billion that would normally be spent on overseas travel is being spent locally. Retailers are looking to cash in on that diverted spending.”
According to research from the ARA in conjunction with Roy Morgan, Australians are set to spend over $11 billion on Christmas presents in 2021.
Plus, the ARA’s research showed that 79 percent of Australians plan to spend the same or more than they did last year.
This is excellent news for retailers after such up and down trading periods over much of 2020 and 2021.
Much of the money going into retailers right now and that will do so over the next few months will transact digitally, a reality entrepreneurs must prepare for.
The ARA and Roy Morgan research showed that a significant portion of the $11 billion expected to be spent on Christmas gifts in Australia this year would come from online sales.
“Whilst businesses in NSW and Victoria are looking forward to welcoming back customers through their doors in time for the Christmas shopping rush, retailers should still be prepared for an elevated level of online spending,” said Zahra.
“Locally, we’re seeing a record surge in online sales with so many people subject to prolonged lockdowns and limited physical shopping options.”
Dominique Lamb, chief executive of the National Retail Association (NRA) in Australia, has noticed the same changes in consumer behaviour.
She believes that paying attention to these developments will help retailers maximise sales and profits this holiday season.
“The pandemic has accelerated the growth in online shopping, so retailers should look at strengthening their digital channels.
“Almost all retailers require an online presence of some sort.
“Throughout the pandemic, many have been forced to bolster their digital avenues, but even in a post-COVID world, online shopping will continue to grow.”
The ARA-Roy Morgan study surveyed more than 3,000 Australians and indicates that an average of 48 percent of Christmas presents are likely to be purchased online this year.
Plus, 58 percent of people said they’ll purchase more items online than they did in 2020.
Roy Morgan chief executive Michele Levine said that the survey shows this Christmas retailing season “is set to see a record amount spent online.”
Retailers have undoubtedly already felt the pressure of the supply chain issues plaguing many industries since the COVID-19 pandemic hit.
This problem is only likely to get worse during the festive season when stock demand is so high.
Zahra says several factors in Australia and abroad are compounding supply chain dramas.
“The capping of incoming international flights has put significant pressure on shipping, and we’re seeing container costs escalating up to four times their usual rate.
“Retailers are having to order stock much earlier than they normally would, with most larger retailers building up healthy inventory levels to ensure they can satisfy their customers.”
The increased demand from the record surge in online sales is leading to more delivery delays, too, which is “compounded by state border controls and limited domestic flights.”
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Plus, Zahra identifies that “the situation hasn’t been helped by the industrial action we’ve seen recently from delivery drivers. Also, some distribution centres and warehouses have been impacted by reduced staffing levels due to COVID cases, affecting productivity”.
“There are numerous issues at play here, and this requires a lot of logistical planning from retail businesses so they can stay on top of things.”
Experienced retailer Dean Salakas of The Party People, one of Australia’s largest party stores, has already been buying up big to prepare for what’s ahead.
“We have overstocked in anticipation of record demand,” Salakas said.
“We expect there will be many customers who cannot get some items they want from some other retailers, and we hope to be the ones who will have the stock to service them.”
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Retailers need to take the following steps now if they want to make the most of this online demand.
Dominique Lamb of the NRA suggests entrepreneurs start by analysing numbers.
“Retailers should complete an audit of their online sales over the past 12 months compared to previous years.
“Not only will this indicate how much consumer behaviour has changed, but it will also help them to forecast the sort of stock levels they’ll need on hand.”
The Party People’s Dean Salakas has been selling online for years, but continues to look for ways to innovate in this area.
“As we are already a leader for party supplies online, we offer a great service with all the whistles and bells,” he said. “However, through lockdown, this has been used more heavily, and we will continue to encourage our customers to shop online.”
The retail brand’s online presence is designed to make transactions easy for shoppers.
“We offer click-and-collect and same-day shipping options to ensure people have just as much convenience shopping online as they would in-store,” said Salakas.
“The idea is to make online more appealing than coming in-store at the peak times.”
Keep in mind, too, that consumers don’t just buy online. They also do plenty of research that way and then shop in-store.
According to a Deloitte survey, Navigating the new digital divide, shoppers are hunters more than gatherers once on site, with 76 percent of surveyed consumers interacting with brands or products before ever setting foot in stores.
Buyers make digitally influenced decisions much earlier in the shopping process these days, and as such, retailers must look for ways to capitalise on online interactions of all types.
A study by mobile and IoT device management solutions provider SOTI indicates, for instance, that consumers want convenience, quick turnaround times, and transparency.
In the From Bricks to Clicks: State of Mobility in Retail 2021 Report, data shows Australian consumers want real-time visibility of their online purchases from the time of order to delivery.
Also, 45 percent will look elsewhere if delivery or pick up of an item takes more than two days.
Plus, 63 percent of respondents said they want easier returns processes, with a preference for automated offerings. Many want to be able to click and collect their orders on the same day, too.
It’s crucial to get stock in now, update your website and shopping carts ASAP, design and implement marketing campaigns, and more, before it’s too late.
Many of these elements take time to organise, so the sooner you begin, the better.
Engage shoppers ASAP if you want to maximise your sales this holiday season.
A tip for success from The Party People’s Dean Salakas is to keep talking to customers to find out what they want and how you might best service their needs in the lead-up to Christmas.
“When the pandemic first hit, we dropped sales by 95 percent,” said Salakas.
“I asked my team to talk to every customer (the remaining five percent, of which there were still many) and ask them what they were buying and why, given parties were off the cards.”
The team at The Party People managed to find some useful insights from their simple market research task.
“We found people were buying things to do at home, rather than for parties,” said Salakas.
“So, we pivoted to focus on that. Sales bounced back to be down only 50 percent within a week and eventually passed 2019 numbers.
“We learnt then to talk to customers, and this holiday season is no different.”
This Christmas, people will celebrate differently, and as a result The Party People staff have started talking to customers and tailoring their approach accordingly.
“For example, we are stocking fewer 100-pack bonbons and more 10 and 20 packs because there won’t be the large gatherings or large venue orders for us this year but instead lots of smaller home get-togethers.”
See what you can learn from your customers about ways to pivot and innovate over the coming months, as COVID continues to change shopping and lifestyle habits.
It’s also vital for retailers to think about what they’ll do if lockdowns come into place anew over the coming months.
Another consideration is how to keep shoppers socially distanced when an in-store presence is allowed.
“Retailers have constantly shown an incredible ability to comply with all safety protocols during COVID,” said NRA’s Dominque Lamb.
“Next steps will depend on the restrictions in place come Christmas time, but again, encouraging online sales is an easy solution. It ensures money comes in the door regardless of social distancing requirements.”
Dean Salakas is getting The Party People ready in case disruptions to in-store shopping arise again.
“Contingency plans have been our best friend so far,” he said.
“We have a contingency for lockdowns. We have plans to roll out if we get a snap lockdown, even if only a few hours’ notice.
“We have a plan for a “soft lockdown” (as in restrictions, but not store closure), hard lockdown (store closure), and full lockdown (where nobody can work from our site). All these plans involve ways we can continue trading under those conditions.”
Salakas and his team are also thinking about how to keep customers socially distanced, even though his shop is vast.
“Our staff all wear masks and ask customers to have masks. We have lots of signs around to advise people of the rules.
“We have added tables with sanitiser and other items to make existing service areas more socially distant from customers.
“We have also trained all staff not to feel uncomfortable asking customers to stand back if they get a little too close.”
With Halloween and then Christmas so big for his business, though, Salakas knows these periods can lead to major congestion on site.
“We’re coming up with a plan to funnel people through the store safely at peak times.
“We’re also looking at extending trading hours to spread out how many customers shop with us at one time.”
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As the holiday season begins, retailers must stay open to changing their plans and be agile enough to cope with adjustments.
The Party People’s Dean Salakas is finding it difficult to get a solid view of the road ahead due to the changing nature of restrictions.
“The rules are still unclear this Christmas.
“We have tried to consider the possible ways in which Christmas would go and have contingencies for likely possibilities. But we also know there might be things that come up we might not expect.”
As a result, he and the team are doing all they can to stay nimble in the face of uncertainty.
“We’re meeting weekly to review our strategies and check if we need to make any changes.
“Our team is aware of this, and we communicate that such disruptions may be on the way.”
Despite the uncertainty, there are still plenty of signs of positivity for the holiday trading season ahead.
If retailers are able to maintain their dedication to customer service and public health while making the most of demand, 2021 could yet become a record breaker for your business.