As 2011 draws to a close, rather than give a general opinion based on the media sources as to how the retail year went, I thought I’d give an across the board view based on the experiences of our own clients and contacts.
Overall, it doesn’t seem to have been too bad a year in terms of achieving sales budgets, some a little down, some a little up. The big issue seems to be about squeezed margins in order to achieve those sales. I speak for the small to medium retailers that are our core business here. The big boys can, to an extent, pressure the suppliers to maintain their margins. Our clients don’t have that luxury, and often have to shop around to find the stock they want to fit their business model, and sometimes have to pay a premium price to get it.
I predict that this will continue to be the situation in coming months and years, and it will become even more difficult to source stock at the right price. Consequently, small retailers need to think smart, be ready and in a position to snap up deals when they present themselves, and not be afraid to walk away from products that simply can’t give the return you need. It all comes down to the old adage “turnover is vanity, profit is sanity”. Never has a phrase been more applicable than this one at the current time.
Buying groups are hugely popular in Australia, because it is the easiest way to obtain stock from the large manufacturers at sensible prices. Unfortunately, this takes away some of the control of your business, and, to an extent, gives rise to a “generic” product offering across some markets.
The other big thing that is happening is the rise in internet sales, which Australia has been relatively slow to catch on to, compared to other major economies. I believe 2012 and onwards will see this rise exponentially. You are probably all familiar with the ongoing issues of people buying from overseas, at significantly lower prices than are generally available in Australia, and avoiding paying GST, which is not, currently, due on items or groups of items valued at less than AU$1000. Also, Australia has been shown to have significantly higher retail prices on a wide range of brand named goods than the USA. Retailers quote their issues as “higher rents, higher wages” etc. While all these things may be true, I have to resort to another phrase borrowed from an old boss of mine: “don’t make your problems mine”. In other words, customers don’t care about why your prices are higher than they can get elsewhere. Yes, they will usually think things through and consider that it’s better to buy locally in terms of after-sales service, local loyalty etc., but if it’s 40% of a difference, that’s just not gonna wash.
So, in conclusion, I think that moving into the future, cost control, shrinkage control and excellent buying are what is going to make the difference between retailers that succeed and those that struggle.
I can see that my local shops were getting a good turn in the few days before Christmas, and certainly those who could be bothered to open just afterwards were getting a good turn too, and I look forward to meeting some retailers who have happy things to say about the end of year performance.
I’d like to take this opportunity to wish you all, a happy and prosperous 2012..