Consumers can expect massive bargains in June as Australia’s biggest retailers use major discounts to cure a sales hangover brought on by COVID-19 this time last year.
Wesfarmers – owner of Officeworks, Bunnings and Kmart – warned investors in a strategy note on Thursday that sales were slowing down after last year’s panic-buying took them to new heights.
And in the eyes of retail expert and QUT academic Gary Mortimer, that means consumers can expect massive end-of-financial-year sales as retailers crank up the competitive pressures.
“Retailers will put tactics in place to try and lessen the impact,” Professor Mortimer told The New Daily.
“They’ll push strong with price-off promotions and end-of-year financial sales … they’ll invest effort to try and minimise that impact.”
And it’s not just Wesfarmers, either. Almost every big retailer is in the same boat.
Amazon, Wesfarmers, Woolworths preparing
Online giant Amazon was first out the blocks on Wednesday, unveiling plans for its Prime Day sale on June 21, with thousands of products to be sold on the cheap over a 65-hour period.
Although the US retail juggernaut is fairly new in the Australian scene, its already clearing over $1 billion in annual sales and got a huge boost from the pandemic last year, as people transitioned to online shopping.
It means the likes of Wesfarmers and Woolworths – owner of Big W – won’t be able to ignore Amazon’s growing influence on key promotional periods like EOFY, Professor Mortimer said.
And further evidence of that could be found in comments made by Kmart boss Ian Bailey on Thursday.
Mr Bailey told investors that Wesfarmers will be looking to “aggressively” increase its market share in the online space, particularly through its marketplace channel Catch.com.au.
That puts Wesfarmers in closer competition with Amazon’s marketplace, which should flow through to cheaper prices and a larger range of available products for consumers.
“A big part of the growth is [adding more products] to give customers more reasons to shop,” Mr Bailey said.
“We’re trying to create the opportunity to be the place to go for many, many products.”
An edge over Amazon?
Wesfarmers reckons it has an edge over Amazon though, as its Kmart and Target businesses have physical stores across the country.
“Online growth has moderated as customer traffic to stores increased, and online penetration has reduced but remains above pre-COVID levels,” the company said on Thursday.
The most recent retail sales data, published by the ABS on Thursday, confirms that.
Online retail sales fell 3.2 per cent in April after months of strong gains, suggesting shoppers are feeling more confident to head outdoors.
But in an ominous sign for all retailers, Australians are starting to spend more on services now that restrictions have eased across most states.
Wednesday’s GDP data showed as much, and EY chief economist Jo Masters said that makes a lot of sense, considering how much panic-buying we did last year.
“We saw a big amount of spending on goods,” Ms Masters told TND.
“[And] there’s only so many new PlayStations or new treadmills you can buy.”
It’s not all bad news for retailers, though.
Overall spending did rise by a solid 1.1 per cent in April, and that’s partly because we can’t go overseas, according to Professor Mortimer.
“Retail gains will continue until international borders open and we get back to spending on travel and investing in overseas resorts and things like that,” Professor Mortimer said.