Christmas comes early for retailers but sentiment is definitely down
Retailers expect overall sales growth but wavering consumer confidence is the coal in the stocking.
Retailers are still expecting overall sales to grow by 5% to more than 10% despite waning consumer spending confidence, according to the 2022 Deloitte Retailers’ Holiday Survey.
79% of respondents expect sales to grow in the coming year. The survey showed that 43% of retailers expect a 5% growth, higher than 30% from last year. Meanwhile, 21% expect overall sales to grow between 5% to 10% this year, marginally higher than 16% last year.
According to Deloitte, this is because respondents expect Australian retail to revert to a more typical environment.
"With the volatility of the last few years our respondents largely expect Australian retail to revert to a more typical environment. Many respondents highlighted changes in the coming year, such as weakening demand in online channels and customers coming back to the stores. One such respondent highlighted the opportunity for omnichannel retailers compared to pure pay online. Whatever the channel, personalisation and a differentiated experience are crucial for success in 2023," Deloitte said.
This is despite 58% of respondents expecting consumers' spending to deteriorate in the next 12 months. Deloitte said that retailers are showing a sense of uncertainty in consumers’ ability to keep spending in the face of rising prices and inflationary pressure.
"This uncertainty will likely continue as volumes tail off and prices increase further. Parts of the market are already impacted such as household goods and supermarkets, for which volumes have declined 1.8% and 0.7% in the June quarter respectively. To date, price increases have filled in the gap, but as higher interest payments begin to bite this may reduce the spending capacity of consumers," Deloitte said.
For now, consumers are still spending. Retail trade continued to grow in the first half of 2022, as consumers left the house to work, eat and play. Deloitte Access Economics forecasts that while there is a range of headwinds both on and offshore, retail sales are expected to remain strong over 2022 to 2023 at 4.1%.
The 2022 Deloitte Retailers’ Holiday Survey was commissioned by Deloitte and conducted online and in-person between 29th August – 30th September 2022. Over 45 retail executives across a range of categories were polled to pull results from a cross-section of the market. The executives included CEOs, CMOs/CDOs, CHROs and CIOs from locally listed, multinational and independent retailers. All have a medium or high level of involvement in buying, supply chain, operations, distribution and merchandising for the coming holiday season.
