On 1 January, The Australian Retailers Association (ARA) put an update out on expected post-Christmas sales from Boxing Day to 14 January to be $15.1 billion. A year ago the actual sales for that period were $14.6 billion, so a 3.4% increase is projected.
With its research partner, Roy Morgan Research, the ARA is looking for cafes, apparel and food to be the biggest gainers as the shopping turns from gift-giving to personal purchases.
"We believe there is room for further adjustment on the cash rate, and while a favourable decision in February will be too late to encourage Christmas spending, this adjustment would certainly allow retailers to start their new year with confidence," ARA executive director Russell Zimmerman said.
Consumption in cafes is projected to be 6.2% higher than the actual post-Christmas sales a year ago. Food and apparel should be up 3.8% and 3.9% respectively. Although not including any figures for online sales predictions, many retailers have been beefing up their multi-channel marketing in preparation for a large increase in online sales, as well as developing dedicated distribution centres to assure quick inventory movement.
Myer Holdings (ASX: MYR) hit a snag on Boxing Day with its online sales portal crashing due to the great amount of site traffic. After a week down, on 2 January it was back up, now offering online-only promotions to salvage what it can of potential sales. To sweeten the deal, it is also giving online purchasers free delivery for sales made by Sunday.
Kathmandu Holdings (ASX: KMD) entered the S&P ASX 200 Index (ASX: ^XJO) in early December. It had a 104% rise in share price over the past year. It is looking forward to expanding online sales, especially through the experience of newly appointed director David Kirk, who is also non-executive chairman of Trade Me (ASX: TME), the leading online classifieds' portal in New Zealand.
Fashion apparel retailers like Premier Investments (ASX: PMV), Country Road (ASX: CTY) and Specialty Fashion Group (ASX: SFH) could also benefit from the 3.9% projected increase in post-Christmas sales from the ARA-Roy Morgan Research update.
Foolish takeaway
Sometimes the level of sales increases can be a sign of how the rest of the year may be, but last year the first few months were promising, yet thereafter they trailed flat. With more discretionary spending expected this year, retail sales should be stronger. That will be tempered by the reluctance of the RBA to cut interest rates further, as well as by rising concerns about job security.
