Retail spending is going strong in the lead up to Christmas but not everyone is cheerful.

 

Deloitte Access Economics’ latest quarterly Retail Forecasts subscriber report  shows retail spending has weathered the COVID-19 storm “remarkably well”, with volumes surging 6.5 per cent over the September quarter  

 

This positive momentum has continued into the December quarter, with retail sales volumes expected to grow 2.6% in the 2020 calendar year ▪ 

 

However, Deloitte’s recent Retailers’ Christmas Survey indicated a clear polarisation in Christmas spend expectations, with a record number of retailers expecting sales above five per cent, tempered by a substantial number expecting sales to fall by more than five per cent. 

 

Normally 500 (mostly small) retailers enter external administration by this time every year, according to Deloitte. 

 

There have been far fewer retailers failing in 2020, with a risk of an insolvency catch-up in the first half of 2021 as fiscal stimulus and various support measures come to an end. 

 

Deloitte Access Economics partner, and Retail Forecasts principal author, David Rumbens, said: “Retail’s strong performance is due in part to opportunity – consumers aren’t able to spend as much on travel and other services – as well as changing preferences – consumers are spending more on home-centric goods. 

 

“So retailers are capturing a greater share of consumer wallet. While overall household spending is still down compared to pre-COVID levels, retail sales have surged ahead. And this increase in market share is likely to linger for some time as restrictions, and consumer reluctance, for travel remain a barrier to spending on transport and accommodation.

 

“The Christmas period is critical in any year, but for businesses facing significant disruption to operating conditions, who relied on stimulus measures that are slowly fading and who haven’t made necessary structural adjustments, there is a risk that a poor sales performance could be the straw that breaks the camel’s back,” he said.