By Peter Sheppard
Senior Deployment Consultant, Retail Doctor Group
As we approach the end of a long road of lockdowns, as consumers and business owners, we are getting excited about the road to the new normal, starting on Monday 11/11 and progressively accelerating to the end of November. However, the question for retailers is how this is going to play out.
There are two camps of forecasters:
- Those that believe the tens of billions of dollars currently being held by households will be spent in a major rush back to retail, with consumers flooding stores and spending up big time on consumer goods, Christmas gifting, social events such as restaurants and entertainment
- Those that believe much of these savings will remain in the bank and that we have learned to live more frugally with lower average spending patterns.
Whichever camp you are in, the next 12 weeks in retail could be the most important period in many years. Last year, the total retail spend in Australian retail was just over $91bn in these three months, with the peak in November due to the contribution of online purchases during this month. This year, I expect this peak to be even higher and happen sooner, due to the warnings about delivery delays.
It seems reasonable to believe that we will see around a 10% lift in the overall total sales for the period to $100 bn. So, what we know for sure is that you, as retailers, can effectively respond to, and in so doing, maximize your results and profits in this pivotal period.
From our research, we know that:
- Consumer sentiment is returning and that there is pent-up demand for goods and services throughout the community.
- Delivery times for online sales will be much longer than usual. Generally, the delays will be for weeks, not days, prompting people to shop earlier than before.
- Major online players will be bolder than ever during their promotions, such as on Singles Day (11/11), Click frenzy (9/11), Black Friday (26/11), Small Business Saturday (27/11), amongst others. Players such as Amazon, eBay, Kogan, and many others are putting out very tempting offers. These offers will not only last one day but will be extended to many days. This will help sales grow in the online channel by 20 to 25%, once again, taking online sales for this period to circa $15.0bn
- Fully vaccinated junior staff is not easy to find, putting pressure on store service levels due to the vaccine only being available to them recently.
- There is a strong possibility of late deliveries of products, depending on your category, due to reduced manufacturing capacity, freight bottlenecks, etc.
These challenges, amongst others, will make it a difficult time for underprepared retailers. Some of the solutions to these issues were available from the past. And there is still time for extra required preparation.
Simply reopening the doors on 11 October, or soon after, will not be enough to get punters through your doors. You will need to ensure that:
- You have planned or are planning to efficiently be in a position to handle the increased customers doing earlier-than-usual Christmas shopping.
- You have staff in place to fulfill both in-store and online demand
- Your products and orders are on track for timeous delivery
- Your online tech is up to date and adequately functioning
- You have a detailed promotional calendar
- You are well-connected to your database with a strong communication and social media program, offers
- And more importantly, you are fully compliant to the Covid protocols that will apply at different times.
Quite a list of to-do, if you want to be successful in one of the most important 12 weeks of trading in recent history.
Before executing all these actions, have you checked your key benchmarks to know how you are shaping up against your peers in the industry? If you know the vital industry averages, you will be better placed to set your sales goals and target, buy the correct volumes of stock, set the best pricing strategy, and get the best margins. It is difficult to know how to grow your business if you do not know the benchmarks that are being achieved by others.
Should you wish to have a FREE 15-minute discussion with the experts at Retail Doctor Group, give us a call and ask what you should be achieving in some of the key measures such as $ p sq .m, Occupancy cost %, gross margin %, stock turns and more. Or should you be battling with any aspect of your business management, remember, even the best needs a coach!
Peter is a Senior Deployment Consultant at Retail Doctor Group. He is skilled in all facets of retail management as well as general acumen with a strong focus on strategy, results and growth. Connect with Peter on LinkedIn or email him to learn more about our Deployment programs at [email protected]