Retail sector looking good for the future

After a strong performance in the 2015 financial year, the Australian retail sector looks set for an even stronger performance in 2016.

There’s no doubt that the retail sector in Australia faces some challenges. From online shopping to consumers’ discount mentality, it can be difficult to make a good profit margin. Nevertheless, some experts are tipping a bumper 2016.

One exmple of this is BDO Australia’s Australian Retail Index; BDO’s 2015 spend trend report showed that despite some high-profile losses in 2015, the retail sector lifted during the year, and should only improve in 2016 due to increased investment in the market.

The report also states that 2015 was a strong year due to low interest rates and the lower Australian dollar, which combined to make local shopping more attractive to consumers.

According to the report, Australian speciality retailers increased their sales revenue by 5.3%, and international retailers by 9.4%.

BDO retail specialist John Bresolin states that “in order to increase their marketshare and leverage consumer confidence, Australian retailers boosted their marketing spend by 35.7 percent in relative terms, including investment in digital marketing to coincide with an increasingly mobile marketplace”.

“Many retailers now employ dedicated social media staff or have appointed a digital marketing department to coordinate these efforts, with tools like Facebook, Instagram, and YouTube being used heavily in key sales periods such as the lead up to Christmas.”

Lush Cosmetics Brand Communications Manager Natasha Ritz believes that the use of social media is a significant contributer to the current strength of the retail industry. She believes that social media allows companies to drive engagement, drive brand loyalty and build trust.

“Social media allows us to tell our story, share content and encourage conversation, not just about our brand or products but topical issues and deeper messages, to help build trust and relationships with our customers.”

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Post-Christmas sales

Mr Bresolin agrees with this sentiment, stating that the social media surge among retailers coincides with the recent growth in online sales. Many companies have recorded double digit gorwth figures in this category. This is a trend that is only set to continue as companies gravitate more towards online methods of sales.

According to figures from the Australian Retailers Association, retailers are on track to earn $16.8 billion between Boxing Day and January 15.

ARA Chief Executive Russell Zimmermann says that “consumers have embraced the annual post-Christmas/January sales this year, taking the opportunity to stock up on bargains not normally seen at this time of year”.

“Department stores have also had particularly strong foot traffic, with our figures anticipating a 4.7 percent increase for the category compared to last year.”

The majority of post-Christmas shopping growth has gone to Victoria, with a 5.6% and $4.2 billion increase across the aforementioned 21-day period. NSW will have recorded a 3.8% and $5.3 billion increase in the same period.

These figures indicate an extremely strong performance from the retail industry over the Christmas period.