Christmas no saviour for retailers

18:45, Oct 10 2012
santa stand
Retailers could struggle this Christmas, with more and more shoppers looking for bargains.

Cost-conscious consumers are heading into yet another discount- merry Christmas, bringing little cheer to retailers who are already in survival of the fittest mode.

Women's clothing chain Shanton Retail was put into receivership this week, the latest in a list of apparel company receiverships in a tough retail environment.

Commentators say mid-market retailers are most at risk and need to re-invent themselves or diversify online to appeal to today's shopper.

Virginia Wilkinson, research director at Coriolis Research, said Shanton was "another mid-market statistic".

Clothing retail "is just so fickle. There are new concepts constantly coming along, new stores opening, old ones closing. You either have to re-invent yourself to move with your customers or be attractive to a new market, or you perish. It's fashion too, it's easy to get wrong."

Mid-market retailers were more vulnerable than lower and top-end retailers, which had more defined and stable clientele, Wilkinson said. Electronics retailers were also in one of the trickiest retail sectors. "It's hugely competitive and prices have come down astronomically. They've got to be hurting."


Retailers Association spokeswoman Louise Evans-McDonald said clothing retail was a particularly competitive area, and required a large number of outlets.

Unreliable weather made selling clothing difficult, with hot or cool weather typically arriving just as that season's stock needed to be cleared to make way for the next. Retailers across the board were also suffering higher external costs.

Evans-McDonald said the association expected year-on-year retail sales growth this Christmas, "but that will be at a conservative level".

Retailers could no longer rely on Christmas to make up for a poor year, and those budgeting to sell all their stock at full margin could find themselves in trouble.

"We've created a new consumer that's now expecting to see decent sales. Now a 10 per cent sale is just not going to cut it, 20 per cent may get a look and if it's 50 per cent they'll consider that a sale."

The association put online sales at about 6 per cent of total online spending, with two thirds going overseas, and local clothing retail was one of the categories losing out.

Wilkinson said it would still be a fierce fight between retailers for customers' Christmas coin, and there would be more of the pre- Christmas sales seen in recent years.

"They're going to try and get people in the stores before the Christmas rush. But people are busy. If it's a really good sale, they might come in but otherwise they'll leave it till the last minute, like they usually do."

The strong kiwi dollar, lower or zero shipping costs and quick turnaround was making e-shopping more attractive, including to older age groups.

Market commentator Arthur Lim said there had been a massive shake-out in retail in the past few years, evidenced by empty shop fronts and the high turnover of stores on high streets around the country.

However, listed retailers such as The Warehouse and Pumpkin Patch which had adjusted with the times through restructuring, new format stores and online offerings, were showing improvement.

Taranaki Daily News