Australia’s beleaguered retailers suffered another ‘disappointing’ month of slowing sales, but amid the gloom are a handful of businesses with a recipe for success.
January proved a difficult month for the retail sector as consumers’ ever-tightening purse straps continued to squeeze shop owners.
But Australian Retail Association executive director Russell Zimmerman said there’s still hope for struggling stores.
Speaking to The New Daily, Mr Zimmerman said businesses like clothes retailer H&M, franchise baker Ferguson Plarre, and consumer electronics giant JB Hi-Fi haven’t succumbed to the weakening economy.
“There are also some smaller retailers that have had some outstanding growth,” he added.
“They might only be a number of small shops, but I think what you’re looking at here is retailers that have got a very clear direction and focus – they actually understand their customer.”
It’s this intimate customer knowledge that gives these businesses their competitive edge, Mr Zimmerman said.
“It comes down to understanding your customer, getting all your sales avenues right, and building a business that is clear and identifiable,” he said.
“If you’ve got a bricks-and-mortar business that’s tied back into an online business, which is then tied into your social media, if you’ve got all of those things right, then you’ve probably got the recipe for getting things right.”
A lot of the factors driving these retailers’ ongoing successes can be replicated by other businesses, too.
Now the pressure is on for Australia’s other retailers to adapt – or die.
“The retailers of Australia will need to reframe and rethink their business,” Mr Zimmerman said.
“If they don’t, then Amazon – which has a very good understanding of its customers – will eat our breakfast, dinner and lunch.”
January retail figures ‘not a healthy look’
Some $26,036.7 million passed through Australia’s tills in January.
Although that sounds like a lot, it represents a 0.3 per cent drop on December’s $26,058.8 million.
“It’s not a healthy look at all,” Mr Zimmerman said.
“These numbers are concerning. It’s basically wiped out any increase we saw in November. It’s really hard to pick anything within this month’s figures with any real joy in it.”
Dr Sarah Hunter, chief economist at BIS Oxford Economics, said the numbers are proof 2020 is off to a “rough start”.
“The latest data and information suggests that the economy is on course for a contraction in [the first quarter], and the risk of a recession has risen significantly,” Dr Hunter said.
“With the disruption from the coronavirus only really materialising from early February onwards, we expect to see a substantial worsening in retail conditions in the near term.”
Worryingly, January’s figures come off the back of a weak December – a month that typically benefits from the Christmas rush.
Shoppers instead turned to large online sales at the end of November to stock up on presents, bringing forward the traditional December lift in turnover by one month.
Dr Hunter said economists would normally expect January’s retail data to “bounce back” from the “artificially weak” numbers seen in December.