CategoryShop locally

We are grateful to the many retailers who have shared recent year on year comparative sales data. This has enabled us to a deep dive into shopper traffic, basket depth and product category performance. We have done this to get an early look into what Christmas 2020 in local small business retail might look like.

The headline is that Christmas 2020 looks good in local small business retail.

Local high street retailers are doing considerably better than shopping mall retail. Suburban, regional and rural high street retail businesses, for which we have comprehensive sales data, are doing very well. They are experiencing solid double-digit year-on-year growth. For the dataset of 60+ businesses in our latest analysis, the average year on year revenue growth is 22%.

What is interesting is that the spike in revenue growth is not matched in a spike in shopper traffic. Rather, the revenue spike has come from shoppers buying more in each visit, driving better shopper efficiency. We are seeing average sale value increase by between 10% and 25%.

The dataset includes business across all states and territories except for the Northern Territory. The results are universal. There appears to be no difference between Victoria, which was in lockdown for some of the weeks under analysis and other states that were not in lockdown.

In terms of Christmas specifically, data indicate excellent year on year growth in Christmas card sales. The same is true for Christmas decorations, Christmas-themed home decor and gift wrap. Year on year growth is, again, 20% and more.

Locally made products are doing particularly well. Shoppers continue to engage with supply chain questions. A common question relates to sourcing from China.

Also of note is excellent growth in sales of calendars and diaries. The diaries growth encourages an optimistic outlook on 2021. Smart retailers are pitching it as that and having some fun with putting 2020 in the past.

Back in March, in the early days of Covid in Australia, jigsaws were hot. They sold out fast. Some expected the surge to fade over time. The latest sales data for October and even into the first two weeks of November suggest otherwise. Yes, jigsaw sales remain strong. half of the stores in the latest dataset sell jigsaws and every one of them is reporting year on year growth. The average of that growth is 150%. Key is breadth of range of supply.

In addition to the jigsaw growth, crafts, art, maker kits and similar are all showing strong results.

Comfort gifts are especially strong. Core in this category is plush. Plush is often dismissed as being tired or ho hum. We have seen sales in the plush space up as much as 50% off a strong base. In one local high street retail business in one recent week, for example, they did $1,850.00 in everyday plush, more than double their usual sales. Range, again, is key this this success.

Not reflected in the POS software collected data is anecdotal evidence that people are spending more this Christmas. Many retailers spoke to this. They spoke of shoppers saying they were spending more on loved ones as well as buying gifts for some they would not usually buy for.

There is the wonder as to the role of government stimulus funding on the sales results. While retailers think is is a factor, they do not see it as the key factor. If time does reveal it as a key factor, local small business retailers will respond accordingly. They are an agile bunch.

Considering the sales data and the and the anecdotal comments, Christmas 2020 looks strong. Plenty of retailers are already talking up the first quarter of 2021.

We’ve all seen the headlines, because news outlets are drawn to  the drama of retail closures and challenges. Terms like retail apocalypse and retail armageddon have appeared in stories in recent weeks on the back of a series of challenging news about retail.

These headlines are, in view, inaccurate and unhelpful.

News outlets are quick to run stories forecasting doom and gloom. Often, the stories skate close to the surface without much analysis as to the reasons for closures. This bothers me as understanding the details can be helpful for context, and for mental health for those in retail.

Here are some of the stories already from this year (2020) with notes from usher at Tower Systems  offering context:

• Harris Scarfe is closing 21 stores. They have been in trouble before. It is a second tier department store with  modest critical mass. It found it hard to be competitive in a marketplace;axe that does not favour depatrment stores. I think their problems are due to department stores overall being in trouble and that they are a small group and therefore less able to weather changing times.
• EB Games is closing 19 stores as a first step in an international review of physical store retail. I expect there will be more closures. There has been a fundamental shift in how games are sold. {physical stores are not as important as they used to be.
• Bardot is closing 58 stores. This is a fashion brand that has not maintained relevance.
• Curious Planet is planning on closing 63 stores. Ever since they list the Australian geographic branding the future has been in doubt.
• Jeanswest is in administration and is reportedly likely to close 146 stores. Jeanswest sells discount jeans. The biggest group of jeans consumers are looking for more engaged brands than Jeanswest offers. Their differentiation was minimal. They as a business had not kept with the times.
• Bose is closing 119 stores. They have figured out the commercial benefits of direct online engagement. Offering a 30 day no questions asked money back guarantee and costing shipping and other challenges, the company will make more money by closing 199 stores (leases, labour etc) and investing some of that into stronger online marketing.

The Bose move is what we should expect to see more of from international brands consumers trust. They will make more from direct consumer relationships and we think that this has been considered by Bose in their decision making to close physical retail.

Rather than being drawn to the doom and gloom, which is a natural human response on reading reports like these, our time and energy is better spent on ensuring our retail businesses are relevant today.

How do we do that?

Yeah, it is the million dollar question … for which there is no one size fits all answer for every situation.

Here are some tips that we know work from our experiences helping indie small business retailers:

1. Be the boss. It’s your business. You choose what you sell, who works there, how the business looks and how the business is marketed. Make those decisions like you are in charge.
2. Be relevant to today’s shopper. It’s likely the shopper is not like you. Too many stores stock what the owners and staff like. That is not a model for the future.
3. Be different. The more your shop looks like others the less it will stand out.
4. Provide solutions. It is much harder to convince someone to buy something they do not need, do not like, do not want or do not understand. It is much easier to get them to buy what they like, want, need or understand.
5. Embrace change. Know that what works today will be different tomorrow.
6. Treat data as cash. Small business retailers are notoriously bad at managing data. This leads to poor business decisions, which put businesses at risk. Treat data as a valuable asset and make better decisions as a result.

Sure there is tough news out there about retail. There is plenty of good news too.

Tower Systems is a small business focussed POS software company.