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With less than a fortnight until Christmas, retailers are under pressure to discount stock at the time consumer spending is usually strongest following major online sales campaigns Black Friday and Cyber Monday.
Key points:
- The pre-Christmas period has historically been the strongest for retailers
- But online sales campaigns in November have changed spending habits
- Businesses are adapting, but struggling against weak consumer sentiment
Analysts say there is anecdotal evidence that the online and in-store campaigns in late November boosted foot traffic.
But there are fears the sales spree may have brought consumer spending forward, detracting from Christmas revenue, and put pressure on retailers to keep the discounts flowing.
In WA, shoppers are tipped to spend $5.52 billion between mid-November and Christmas Eve, up 1.7 per cent from last year, according to figures from Roy Morgan and the Australian Retailers Association (ARA).
But the predicted 1.7 per cent rise is the weakest forecast for any state or territory except the Northern Territory.
The National Retail Association has forecast a slightly lower spend of $5.2 billion for WA.
Roy Morgan chief executive Michele Levine said a lack of confidence by households partly explained the weak growth forecast.
"The challenge for Western Australia is that last year, the [Christmas figures] were on the back of pretty high levels of consumer confidence," Ms Levine said.
"Consumer confidence in Western Australia is down quite a lot on what it was last year."
In November, ANZ-Roy Morgan's monthly survey showed consumer confidence in WA was 114 points, down from 120 points at the same time last year.
"What's interesting is [consumer confidence is] still positive," Ms Levine said.
"Consumer confidence nationally is actually lower than [in WA]. For the whole of Australia, it's actually sitting at 108, but it is all comparative."
A 100-point reading indicates a neutral level of consumer confidence, with levels above or below 100 indicating positive or negative sentiment, respectively.
Trent Durward, chair of small business advocacy group Leederville Connect and former owner of toy store Henry Hiccups, said he noticed a downturn in consumer confidence about a year ago.
He said businesses were adapting to the challenges of online retail, but not quickly enough to offset weak sentiment.
"The elephant in the room is the overall economy," Mr Durward said.
"No one's hearing good news about the economy and … monetary policy is not necessarily working," Mr Durward said.
"Perhaps we need to be looking at more fiscal policy. You know, there's greater philosophical arguments about that, but I think that there are problems with the economy."
Sustainable, authentic: Retailers cater to consumer trends
Justine Barsley runs Perth Upmarket, which provides local designers — many of whom sell their goods solely online for the rest of the year — with a shop front for a day.
The quarterly markets attract up to 12,000 visitors and more than 200 retailers, but turnover at the recent Christmas market was lower than usual.
"Sales were still strong, but I guess they weren't what they were a few years back when we had the boom," Ms Barsley said.
"People are still spending, but I think they're being very conscious about what they're buying."
Jeweller Robin Wells is a long-time Perth Upmarket retailer, whose Christmas market turnover was slightly lower than last year.
"I think the markets over the years [for my business] have slowed down, but then when that's slowing down, my internet sales and other things have started to pick up more as people shop online," she said.
Ms Wells added that those online customers required more frequent engagement than in the past.
"Everybody's making something and posting on social media and it isn't enough," she said.
"You have to be authentic and be giving people the authentic story behind what you do.
"People like to know where their product is from, where it's made, who's making it. They need more."
Graphic designer Terri Ioannou founded her company, Mr Poppins & Co, with a friend two years ago, selling leisure bags and beach towels.
"This November was a little bit down on last year. Not significantly, but when you compare it was down," Ms Ioannou said.
"I don't feel like there's a lot of spontaneous shopping going on."
Black Friday, Cyber Monday to top Boxing Day sales
One of the unknowns for retailers was to what extent global pre-Christmas sales campaigns would affect consumer spending.
National Retail Association chief executive Dominique Lamb said Black Friday and Cyber Monday sales were set to eclipse those on Boxing Day for some retail categories.
"We know that homewares and furniture have had significant success around Black Friday sales in particular," she said.
"Certainly, our retailers in Western Australia are reporting that they've had increased foot traffic."
Roy Morgan's Michele Levine said anecdotal evidence suggested Black Friday and Cyber Monday sales were particularly strong this year.
"It'll bring the spending back earlier, however it's just really, really difficult to tell [to what extent]," she said.
"One of the big challenges once you go into an early sales period is that the … retailers have to keep discounting."
A potential consolation for retailers heading into the final days of Christmas trade is the inherent unpredictability of forecasts.
Last year, WA shoppers were forecast to spend $5.37 billion over the Christmas period, but the final figure was slightly higher at $5.43 billion.
Topics: business-economics-and-finance, retail, small-business, perth-6000, wa, australia