There was a lot of trepidation going into the holiday season with challenges around stock supply, staff shortages, pricing management and that constant presence in our everyday, the pandemic. The biggest unknown entering the season was around how were customers going to shop, would they return to the stores or rely on ecommerce and how much were they going to spend.
The numbers are in, and the 2021 Christmas spending activity did not disappoint. As to be expected, some sectors did better than others. Before we kick into the activity we do want to recognise our cousins in the hospitality sector who were hamstrung by traffic light settings and didn’t reap the rewards they should have. I know we all wish them an incredible 2022 so they can get back on their feet and back to business.
The Customer Mindset
There were a lot of warnings being issued before the 2021 holiday season. Supply chain slowdowns were expected to impact the availability of many product categories, “If you see it and you like it , buy it before it is gone” was a popular comment from retailers far and wide.
Additionally, courier delays and bottlenecks driving real and anticipated expected delays cautioned customers to secure their gifts early, so they didn’t miss out in time for Christmas.
Consistent reporting demonstrated that shoppers were buoyant and confident given the assurances from the government, that families and friends would be together and everyone was determined to make this a Christmas to remember after the circumstances of the prior 12 months. Remember, NZ was a little different to our Northern counterparts, they were in lockdown for Christmas 2021 so they were certainly going to go to town and spend.
Traditionally, Labour Day Long Weekend sees the kick-off of the shopping season and the sales continue to build into Christmas, Boxing Day and New Year sales.
While we saw the typically Labour Day Weekend kick-off of sale activity to get punters spending, we have seen the likes of Singles Day, Black Friday and Cyber Monday kick-off well before the event to pull sales forward and flatten demand. Watching the marketing activity it was a game of three different sets of activity. Those desperate to get sales and dropped super low with discounts and offers and those holding their powder dry for the weeks to come due to prudent stock management (we haven’t got a lot so we don’t need to discount to get shoppers to buy) . But the results are telling with all event days up significantly YOY and Singles Day becoming a significantly strong retail event not to be missed.
There was a new event that returned to NZ this year, which has been an Aussie staple for years, Click Frenzy. The 2021 relaunch was 9 November and we believe will continue to grow in 2022. Black Friday has moved more towards a Black Week (or even Black fortnight/month for some retailers) and has certainly solidified its role in the retail event calendar. It’s worth noting that spending for Black Friday peaked the Wednesday prior to the actual day.
Source: NZ Post eCommerce Spotlight
Total spending for December, online and offline, was $6.7 billion, up 5% from 2020. This was good news for physical retailers, especially in Auckland, with national daily in-store spending peaking at close to $300 million just before Christmas.
Boxing Day still performed with nearly $195 million across both online and off, 3% lower than 2020. There was a fear that Boxing Day wouldn’t perform and with the weather so spectacular many headed to the beach. But they were still shopping. Online growth was phenomenal and up 29% up on Boxing Day 2020, driven by nearly 184,000 online transactions for the day.
Overall spending for the quarter was up 2% on Q4 2020 with online making up 14%. In the eCommerce spotlight below, you can see online continuing to grow with the biggest quarter of sales recorded Q 4 2022. While going to the stores is still the main way Kiwis like to shop, online continues to grow rapidly, up from 10% of total retail spend for the same quarter in 2020 and 9% in 2019.
HIGH ACHIEVER: BRISCOE GROUP
It’s always good to learn from the best and earlier this month, Briscoe Group revealed unaudited full-year sales revenue and a new company record of $744.4 million for 52 weeks to January 30.
Group sales were up 6 per cent with homewares stores up 4.93 per cent and Rebel Sport up 8 per cent. Online sales soared 21 per cent year on year. Those figures are even more significant considering last year’s fiscal year comprised 53 weeks. Factoring that in, the YOY increase was 7.97 per cent. If we focus just on the fourth quarter sales
MD Rod Duke described the final quarter as outstanding in the face of “the turmoil, uncertainty and continuing disruption of the pandemic” and don’t forget “The Auckland stores were shut for the first nine days of this quarter.”
What was the key to their success this year? Firstly, ensuring the business had sufficient inventory to satisfy demand during the disruption. Secondly, being able to continue strong promotional events in the fourth quarter (they had plenty of stock to sell) and thirdly, in my opinion, finally having a reasonably decent online offering. Let’s not get carried away as it is still not a shoppers delight (one of my orders were fulfilled by five different stores across the country – that would be okay but I got two courier parcels with less than $7 of product in each from the South Island). The good news is encouraged by the growth in online, the group has committed to investing in both ecommerce and store-fulfilment teams.
TAKEOUTS: If Briscoes are going to finally super power their ecommerce no one has an excuse to sit on their laurels. They have been slow to invest but while Rod is infamously tight at investing, he always invests in the stuff that will deliver. This year stock and ecommerce. They may even set the benchmark for click and collect and speedy delivery.
ECOMMERCE SPOTLIGHT: NZ POST REPORT
The NZ Post Ecommerce Spotlight report show that Q4 2021 was the biggest online spending quarter since they have started monitoring online spend four years ago. New Zealanders spent a massive $2.5 billion online this quarter. That’s 45% higher than the same quarter last year - an additional $772 million of online spend - and up over a billion dollars (71%) on two years ago.
As detailed in the report, to further highlight just how big the quarter was, a third of the year’s online spend happened in just the last three months of 2021.
Source: NZ Post eCommerce Spotlight
TAKEOUTS: Emerging trends
Physical stores are still incredibly relevant: In comparison, spending within physical stores fell by 3% for the quarter compared to Q4 2020. This was largely driven by lockdowns, (especially Auckland) which saw the retail sector only able to operate from early December.
Local continues to gain traction: More good news for retailers based in NZ with 74% of the Q4 2021 online spend local. This trend continues to grow for the second year running in part no doubt, by the uncertainty around international parcel deliveries but also as Kiwi businesses have upped their eCommerce game.
Ecommerce growth sectors: Clothing and Footwear (up 70%), Department, Variety & Misc. Retail (up 67%), and Homewares, Appliances & Electronics (up 64%).
BNPL on the up – especially online: We have concern around the sustainability of this bubble but Buy Now, Pay Later continued its phenomenal run growth, with increased spend of 53% compared to Q4 2020 and more than double compared to Q4 2019.
Who’s buying online: the 30–60-year-old age group still dominates online spending numbers, the 15–29-year age group grew the most this quarter, up 49% on Q4 last year and 81% on Q4 2019.
Reality check Q1 and Q2 2022
Retail NZ released a quarterly report in late January which gives a good feel to the sentiment of the sector. It showed 57 per cent of retailers increased prices in the last three months of 2021. “The impact goes further with nearly three-quarters of retailers expecting to increase prices over the next three months by around 7.5 per cent,” Greg Harford, General Manager Retail NZ said.
Global and domestic supply chain issues continue to drive the cost of freight up, plus cost increases in products, commercial rents and wages put pressure on prices, the report said.
“Unfortunately for the sector costs continue to rise, and after years of absorbing cost increases, these are now being passed onto consumers,” Harford said.
Only a quarter of retailers are confident their business will survive the next 12 months, which was up 11 per cent from the previous quarter.
As many start their promotional planning and sales forecasting 2021’s back of year results and customer behaviour gives some indication of the behaviour expected this year. We have to remember we have trained customers with these events and there is an expectation and anticipation for some fun, excitement and deals to be had. Only time will tell what the impact of inflation and stock availability will have on the coming months.
With 15 years’ experience in global retail trend analysis and more than 25 years commercial retail experience, the team at RetailX help retail businesses interpret, unravel, and apply upcoming trends and human-centre experiences in a way that best fits their business. It is easy to spot these changes when we reflect on retail history – and we make it our job to keep our finger on the pulse around the world.
If it is time to explore new retail thinking in your business, give Juanita a call or email on 0274768073 or Juanita@retailx.co.nz