It seems that Australians held back on splurging on Christmas presents this year, with only food and alcohol showing a modest rise sales.
According to the Australian Financial Review (AFR), analysts are reporting flat sales growth compared to last year, suggesting consumers are still keeping their hands in their pockets and cash in the bank.
Related: More retailers to collapse says Gerry Harvey
Preliminary credit card figures show spending for the month of December was soft, with limited growth in discretionary retail data, according to Commonwealth Bank analyst Andrew McLennan. The busiest trading period of the year is vitally important to retailers, with many relying on the Christmas period to generate a substantial portion of their annual earnings.
Gerry Harvey, chairman of Harvey Norman Holdings (ASX: HVN) has told the AFR that earnings over the December and holiday sales period had been 'reasonable, nothing fantastic'. He added that the company's biggest kick will come in February and March, when new consumer electronics products will be released.
The sluggish sales results in 2012 look set to repeat in 2013, with many analysts suggesting revenues will be hurt by a perceived risk of unemployment and economic uncertainty. Retailers will need to intensify their efforts to drive online sales, reinvigorate their stores and continue to cut costs.
A Dun & Bradsteet survey suggests retailers are expected to extend price discounting to help attract shoppers in the traditional post-Christmas spending slump. The survey showed a drop in expected selling prices to the lowest level since data was first collected in 1988.
Consumer electronics retailers such as JB Hi-Fi Limited (ASX: JBH), Bing Lee, Dick Smith, Harvey Norman, Big W – owned by Woolworths Limited (ASX: WOW) and K-Mart – owned by Wesfarmers Limited (ASX: WES), will be pinning their hopes on the arrival of new products such as OLED and smart TVs, new gaming consoles, games, smartphones and tablets, and their associated accessories.
Foolish takeaway
Tough times look set to continue dogging retailers into 2013. As Gerry Harvey has previously suggested, we may yet see more retailers go to the wall, with only the strongest surviving.
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Motley Fool writer/analyst Mike King owns shares in JB Hi-Fi and Woolworths. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.