Was Santa good to retailers?

30 January 2020

With the reported success of Black Friday and Boxing Day, we look at December sales based on real time data sources and what that means for retailers. 

December typically represents a significant proportion of a retailers annual revenue (particularly in discretionary categories). For many retailers, December has been the month that can make or break a year.

While there is market interest in how retail performed over Christmas, it often takes some time before results are publicly released and we get insight as to how the season went. But we can gain some interesting insights by looking to real time data as an early indicator, including those such as the Kepler Retail Index, and from discussion with retailers.

December results

Early indications are that December sales were below both prior year levels and retailer expectations, suggesting a negative December result can be expected when the ABS data is released next month.

While the December foot traffic remained down on last year across the sector, conversion rates for the retailers in the Kepler Retail Index improved in December, suggesting that consumers were more targeted and intentional with their purchases when they did venture out.

While some retailers able to differentiate themselves may have delivered solid Christmas sales by capturing market share, we anticipate this will be the exception rather than the rule and most retailers will have recorded December sales results below expectations.

Impact of sales events 

The Kepler data suggests that Black Friday was a great success, gaining further traction with both retailers and consumers compared to last year, driving the 0.9% growth in November sales reported by the ABS with sales in the balance of November being below the prior year.

Given the success of the Black Friday sales, there were some commentators suggesting this may be a substitute for spending during the more traditional Christmas and Boxing Day sales period. It appears consumers pulled forward Christmas shopping from December to November but the Boxing Day sales outperformed the prior year.

This shift of spending to the Black Friday and Boxing Day sales events where discounts are generally at their peak and the “hollowing out” of sales in the lead up to Christmas is likely to have eroded retailer margins, putting further pressure on profitability on a lower sales base.