By Bridget Gourlay
It’s the most wonderful time of the year, or so the cheesy Christmas carol goes. While that might be debatable for some of us, the silly season certainly gives retailers arguably their biggest boost of the year.
But 2008 was rough. 2009 was better, but not great. What will 2010 be like, and if it’s not a humdinger, will some SMEs be able to survive another year?
NZ Retailers Association CEO John Albertson is fairly positive this Christmas will be a good one for retailers. He says it has been a tough 12-18 months with the recession and a “lousy winter” because of the Canterbury earthquake and the floods in Southland.
“People will be looking to be positive and to do something for themselves.”
Morning Star economist Nachi Moghe says the economy has been relatively flat this year, and to the surprise of economists the September quarter was particularly bad. “Christmas won’t be that great, but it will still be the best quarter for retailers.”
Tauranga Chamber of Commerce CEO Max Mason says retailers need to be realistic. “Returning to the ‘boom time’, the profits made in 2007, is unrealistic. We must change the perception of what is a ‘normal Christmas’. That was a time of exuberant over consumption driven by easy credit and perceptions of wealth driven by fast rising property prices.
If retailers can get their business model to align with the new realistic view, they will be fine. The people that are hanging out for boom time again, have costs which are too high. Although most businesses that have got through to now are probably going to see this [recession] through.”
Tax cuts and GST
In October, the Government gave everyone, particularly middle and high income earners, a tax cut and put GST up to 15 percent.
Morning Star economist Nachi Moghe says he doesn’t think the changes will have any effect on Christmas sales. Even those getting an extra $50 a week won’t be too tempted to spend more, because goods from China will be rising because of the Yuan.
John Albertson disagrees. He thinks by early December people will have clear understanding of what the tax cuts will mean, and will have a better idea about how prosperous they are feeling.
In the golden, pre-recession days, shops were eager to take on temporary staff over December to deal with the extra customers, and often kept them on in January as their regular employees went on holiday. This meant more jobs – mainly for students saving up for the academic year ahead.
But recently, many retailers haven’t taken on casual sales staff during December, or as many as usual. John Albertson says with the cuts retailers have been making to their business operation in general over the past few years, many are running throughout the year on a bare bones structure. He says that means shops will need temporary staff to fill the gap.
Vision Manawatu CEO Elaine Reilly is fairly confident of a cracker Christmas where shoppers spend “healthily but not stupidly”.
“What you want for New Zealand is not debt driven spending,” she says. And Reilly doesn’t think shoppers will be heading to Wellington to buy, because Palmerston North, particularly the revitalised Manawatu Plaza, has it all. She suspects ruralites will be coming in for well-planned shopping trips in the lead up to Christmas.
Tauranga Chamber of Commerce CEO Max Mason says for his region, and many others in the central North Island, the entire summer period is a busy, money-making time. He says retailers need to keep their good systems and good customer service going through out the whole period.
Mason also advises smaller shops to think hard before competing on price against the big discount sales of the larger retailers.
“There is sometimes a tendency to be seduced by getting turnover rather than maintaining margins. Rather they should focus on specialist and niche products, and adding value in other ways.
“Don’t look past the strength of collaborating,” recommends Vision Manawatu CEO Elaine Reilly. She knows a group of retailers on a shopping street in Palmerston North who recently teamed up to market their location together.
Reilly also thinksbusinesses should also work with hotels and motels in the region to get tourist sales.
John Albertson advises retailers to make sure they are well planned – to have good plans already in place about what staff they need, how products will be priced, and how to present the shop.
His most vital words of wisdom are to keep it simple. “Simplicity in shopping is what customers want. They are under huge pressure, thinking of lots of things like Christmas dinner and family and the easier you make it for them to shop, the better sales will be.”
So, the message is – get the displays up, get the new products on the shelves and hear the tills a-jingling. Tis the season to be jolly, after all.
Christmas Day falls on a Saturday this year. NZ Retailers Association CEO John Albertson thinks many people will be heading away on holiday on Friday (the 24th) meaning the big spending will probably happen the weekend beforehand, on the 18th-19th December.