Just as the Australian Bureau of Statistics (ABS) announced month-on-month retail turnover declined for the first time in 2022 in October, retailers appear on track to clocking a record Black Friday-Cyber Monday (BFCM) sales weekend.
However, there are concerns this may be at the expense of Christmas sales while higher interest rates weigh on budgets ahead of 2023.
The ABS reported a 0.2 per cent monthly decline in turnover in October, but industry representatives will be hoping that’s a blip as sales are propped up by multiple sales events leading up to Christmas including Singles Day on 11 November and the BFCM weekend just past.
With annual inflation having run at 7.3 per cent in the September quarter, retailers would be hoping for a similar percentage rise at least in order to keep real economic growth rates in positive territory amidst higher costs of goods sold (COGS).
Adam McDonald, CEO of logistics consultancy TMX Global’s ANZ arm, says November could surpass the Christmas peak this year because of the rise in these sales events, and whilst retail sales are still increasing the trend is “definitely coming off, and is likely to hit a cliff”.
“This change in pattern is not just about the discounting that is seen in these events, but it is also about the increasing proportion of shopping that is being done online,” McDonald says.
“People are wisely planning ahead for Christmas to take advantage of savings and to ensure time for delivery during this peak season.
McDonald says economic activity and consumer demand have held up in the face of the significant official interest rate rises this year, but that may be about to change.
“What this means is that households may be about to hit a cost-of-living crunch mid next year, with the coming November sales one of the last opportunities to splash out before austerity hits household budgets.”
The expert notes supply chains could be put under pressure by this uptick in activity in November.
“The stock is in the warehouses. Buffers have been built to counter the broader supply chain disruptions that were felt during COVID,” he says.
Sean Crook, co-founder and director of freight forwarder Neolink, says factory orders from his customers were at record levels from August to the beginning of October.
“A lot of these orders were mainly driven by a high expectation for record sales for Black Friday, as well as building stock for Christmas,” Crook explains.
“Initial feedback we have received from customers at this stage is that their warehouses have been extremely busy picking orders for black Friday deliveries and ensuring they meet customers’ expectations.
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