The retail sector is already getting into gear for the upcoming Christmas sales period, although this time round there are additional elements for retailers to consider, according to Pitcher Partners managing partner, Terrence Teh.

“Some of the major concerns that are being raised by the sector include supply chain concerns, customer demand and inventory. While we continue to grapple with the ongoing pandemic, the effects on supply chain have been common,” he told Retailbiz in a recent interview.

“Many businesses have expressed delays in shipments and rising costs, all of which has an impact on their ability to deliver and fulfill orders. And the current lockdown situation across the eastern seaboard of Australia has created a lot of uncertainty for retailers and customers.”

Teh believes SMEs with concerns around capital and cash flow have generally reconsidered how much they would order for the Christmas period.

“The big question in their minds is usually ‘can I actually open up my physical channels for Christmas?’. Add to that, perceived consumer weakness has made some retailers less bullish on the Christmas period, as they want to avoid being stuck with too much inventory,” he said.

Interestingly, there were similar sentiments this time last year, as Australia, along with the rest of the world, was trying to understand what was going to happen during our usual busy period leading up to Christmas.

“Many were predicting a slow or weak end to the year, as they theorised that consumers were more willing to save money in uncertain times. Yet, we experienced the complete opposite. The National Retail Association confirmed 2020 Christmas as the biggest Christmas on record. Compared to 2019, where Christmas trade figures were $49.9 billion – Australia saw an 11% jump to $55.4 billion.

“The NRA also estimated that digital sales drove the bulk of the increase, growing from $3.4 billion in 2019 to $5.4 billion in 2020. It was clear that consumer confidence was restored during the end of year, or maybe people just felt like splurging after a tumultuous year of lockdowns and international travel restrictions.”

What’s different in 2021?

While retailer confidence may be varied at this point, the current situation is different this time around, according to Teh.

“In 2020, the world was building an understanding of the Covid virus and its effects on society – and that meant a high level of uncertainty driving consumer behaviours and business decisions. This time round, there is ‘less fog’ in the current environment,” he said.

“Firstly, people have generally become more accepting of the current situation and are trying to get back to living normal lives. On top of that, the major states are building momentum around vaccination rates and each day brings us closer to desired state targets. Digital commerce has progressed on many fronts and purchasing online is a natural go-to decision for consumers these days.

“We encourage state governments to develop and share the roadmaps as early as possible, to help build confidence into the sector. And no doubt, when lockdown restriction eases – we will likely see a strong resurgence in retail confidence as people will generally be excited to get back out and apply retail therapy leading into the Christmas period.

“As always, we believe there has been enough anecdotal evidence that demonstrates businesses that have pivoted and adapted into being digital-first will likely perform better than most.”