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This week’s Black Friday sales could be the peak in retail sales before consumers hit the cliff edge
This week’s Black Friday sales could be the peak in retail sales before consumers hit the cliff edge
30 Nov 2022| News |
787 words

NOVEMBER could surpass Christmas as the peak in retail sales this year, before the dramatic rise in interest rates starts to hit household budgets, supply chain consultants TMX predicted today. But, weak sales in the last quarter could leave retailers with full warehouses and high costs.

Over recent years November has challenged Christmas as the peak shopping time of the year because of the increased prominence of sales events such as ‘singles day’, ‘Black Friday’ and ‘Cyber Monday’, and a great proportion of spending being done online.

However, weak retail trade figures for October (-0.2 per cent month-on-month) have retailers concerned. Many businesses built up their stock levels during the pandemic. They need strong turnover through to the end of the year to clear their high stock levels before consumers get cold feet, as costs of living such as energy prices and higher mortgage rates start to bite.

TMX Global’s CEO, Travis Erridge, said that it is clear that the seasonal pattern of monthly retail sales has changed in recent years.

“This is not just about the discounting that is seen in these big sales events, but it is also about the increasing proportion of shopping that is being done online.

“People are wisely planning ahead for Christmas to take advantage of savings and to ensure time for delivery during this peak season.”

Australia Post’s 2022 eCommerce report made it clear that ‘the pandemic changed the way we shop, and that those habits are now ingrained’.

All retail sectors saw an increase in the share of purchases being done online (even in months of 2021 that were not impacted by lockdowns). eCommerce accounted for almost 20 per cent of total retail spend in 2021.

Fashion and apparel now see more than a quarter of sales online, and ‘variety stores’ more than a third. From the consumers’ side, more than 80 per cent of households purchased something online in 2021, more than double the pre-pandemic level.

TMX Global advises major retailers including Coles, Kmart, Coca-Cola Japan Bottlers Inc, Asahi, Singapore Post, Bunnings and Universal Robina on how to optimise their businesses.

Mr Erridge said economic activity and consumer demand had held up in the face of the significant official interest rate rises this year, but there are concerns that October’s data are an indicator that may be about to change.

“According to the major banks, fixed rate mortgages increased as a proportion of the home loan stock during the historic low interest rate period of the last decade,” he said.

“At the peak of activity in July 2020, 46 per cent of mortgages were fixed, with a significant proportion of these loans due to revert to more expensive variable rates between July and December 2023.

“What this means is that many households are 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 weak October numbers are a concern that it could be hitting earlier than we had expected, which is going to leave retailers in a difficult situation.”

Mr Erridge said retailers have built up their stocks during the pandemic to mitigate the supply chain disruptions.

“Full warehouses are costly, if consumers pull back earlier than expected that will mean that retailers will have to make a choice between discounting and carrying stock on their balance sheets.

What happens in the next few weeks will be a real barometer for the economy going into 2023. How the consumer feels, and how well the retailers are going to be placed to weather an economic storm.” he said.

He also noted that, despite the high stock levels, bad weather and labour shortages may still impact how quickly purchases arrive at consumers’ doors.

“We have seen our clients put significant time and money into optimising their supply and delivery chains over the past two and a half years, so we are better placed than ever before to handle a big ‘Christmas’.

“But global events and widespread flooding, and just the shortages of people to do the work, are still going to exert pressure on the chain when the sales demand kicks in.”

About Us

TMX Global is an end-to-end supply chain consultant. Its bespoke solutions for supply chain optimisation, are transforming some of the world’s leading brands.

TMX boasts more than 200 experts in supply chain, property, project management and ecommerce in over ten countries throughout APAC, the UK and USA.

For further information, media interviews or images please contact Adam Connolly – 0417 170 084 aconnolly@apollo.sydney

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