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The roadmaps out of lockdown released by the NSW and Victorian state governments last week offer a welcome glimmer of hope for retailers. Whilst it may not be as quick as many would like, retailers will start to re-open their stores in October as they shake off the pandemic torpor and prepare for an explosion in customers returning to stores.

August retail sales were down 2.3% against last year according to the Mastercard SpendingPulse™ data released last week. This is a similar decline to July, with NSW and Victorian retailers bearing the brunt of the decline due to lockdown restrictions. Discretionary retail categories like clothing, department stores and restaurant/cafes continued to be hardest hit.

But with the retail re-opening set to start in NSW in October, Australian Retailers Association CEO Paul Zahra was optimistic about the Christmas season, noting “the timing couldn’t be more important as retailers gear up for the festive trading season when most discretionary retailers make up to two-thirds of their profits for the year and there are positive signs it’ll be a buoyant sales period.”

Zahra’s optimism was shared by Myer CEO John King at the release of the department stores strongest results in several years. “I think Christmas will come early, I think customers will buy early to protect their own family Christmas, and who wouldn’t want to have a great Christmas after being in lockdown for [months].” Myer’s turnaround is taking shape, despite a horrendously difficult trading environment. Core successes such as growing online sales and reducing excess store capacity will certainly continue beyond the pandemic as the retail economy continues to shift toward digital.

By contrast, the pandemic has seen some retailers emerge stronger than before. Super Retail Group operates the Rebel, Supercheap Auto, BCF and Macpac brands, and has enjoyed overall sales growth of more than 20% in each of the past two years, led by home and leisure categories and the explosion in online. CEO Anthony Heraghty is also bullish about a strong Christmas season, but pointed to a significant issue for retailers who import product from overseas locations, with costly freight delays now commonplace.

Internationally, the reduction in air travel has impacted the availability of airfreight, meaning container ships have become almost the sole means of shipping. Pandemic restrictions, border closures and soaring demand have sent container prices through the roof, with 400% increases hitting retailers hard. And it’s not just a price shock, shipping timeframes have blown out across the world. Heraghty said that if products were “not in the shed or on the shelf today, for Christmas this year I think the chances of it being [in stock] come that peak time is incredibly remote.”

In the United States – where vaccination rates helped authorities ease restrictions six months ago – retailers enjoyed a buoyant summer as consumers flocked back to bricks-and-mortar retail. Department stores led the way, with Macy’s, Target and Walmart all recording strong sales growth – both in-store and online. Retailers expect this to continue into the northern hemisphere holiday season, making big bets on major inventory increases in expectation of surging customer traffic.

The digital shift of retail has undoubtedly been accelerated by the pandemic, and many of the changes to shopping patterns appear likely to outlast Covid-19. However, humans are social creatures, and physical retail still represents well over 80% of all retail sales in Australia. We can expect more digital investment into in-store experience as retailers seek to regain consumers once their doors finally re-open.

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