Ian McGarrigle, Chairman, World Retail Congress
With many retailers around the world focussed on the year’s most critical quarter, it is important to take stock and review what has happened over the last 12 months. What does it tell us about the consumer; their demands; our competitors and our own performance against the market? Taken together, all of these trends also give an early indication of the year ahead.
With this in mind, the World Retail Congress asked a number of industry experts and commentators for their forecasts and predictions on how the year will finish in each of their markets. Retailing is having to cope not only with transformational change across the industry but now has to face up to impending political change in America and across Europe. Many other regions are also facing economic challenges in a way that could impact on retailing.
What has this all meant for 2016’s Holiday season and increasingly important events such as Singles Day, Black Friday and Cyber Monday? Our experts give their regional view and then next month, will provide us with their final analysis based on the actual numbers for 2016 and highlight what they see as the key retail priorities for the next 12 months.
Mirko Hackmann, Editor-in-Chief, Handelsjournal
German retailers celebrate in advance this year. Christmas sales in Germany are going to exceed €90 billion in 2016, following a recent survey of Handelsverband Deutschland HDE, the German retail association. Compared to last year’s figures, this will be a 3.9% growth, once again driven by online commerce. Online retailers expect a €12.3 billion turnover this year – a surplus of more than €1.3 billion respectively 12% more than 2015.
German retail benefits from both a robust national economy and good job market figures. And there is a lucky star constellation, too; due to the 2016 calendar, there are two extra dates of sale in November and December that gives customers more time for high street shopping.
Toys, books, consumer electronics, watches and jewellery are expected to sell particularly well this season. In general, turnover grows about 15% in November and December, in some sectors up to 100%, compared to monthly average. Over-the-counter-shops do benefit more and more from their online business, even though the share of multi-channel retail hasn’t reached 10% yet. Nevertheless, multichannel has already become an important factor of growth.
Richard Hyman, Founder, Richard Talks Retail
Sitting here in London, the Christmas trading season feels somewhat subdued. The prime suspects are Black Friday (bringing spending forward and sucking sales and margin out of Christmas), the most price promotional year in a generation, and worries about next year and some serious economic headwinds (higher costs through wages, rates and a devalued currency making goods much more expensive).
As UK retail has become increasingly overcrowded with stores and websites, more companies have resorted to discounting in order to drive sales. Our data shows that over the 2016 calendar so far, some 60% of retailers have been on sale. And don’t let anyone tell you this is driven by price-obsessed shoppers. Its retailers doing the driving, and an excess of supply over soft demand.
Short-termism is the order of the day, and the compelling need to turn stock into cash. This has encouraged a risk averse mentality, and tended to dumb down many retail offerings. Business is tough and while I am expecting modest growth on last year, it will only take us back to the levels of 2014. Most retailers will be entering what will be a turbulent 2017 with diminished confidence.
Deborah Weinswig, Managing Director, Fung Global Retail & Technology
We expect muted spending among Asian consumers during the Christmas/Holiday season and the New Year. Compared with Europe and North America, Asia as a whole participates in holiday sales by a much lesser degree. Christmas and New Year is not emphasized as a shopping season in Asia, with countries including China, Korea and Japan, not observing Christmas as public holidays. That said, more shopping activity has moved online and Asian e-commerce giants have spread out their promotions rather than concentrating on one day. Alibaba launched promotions for Singles’ Day Shopping Festival which lasted for almost a month, and recently held the Double 12 Shopping Festival.
The bright spot is Japan: Japan hosts a nationwide sales period in January each year which is similar to Boxing Day sale but starts much later. Sales will be in full swing by second week of Jan during when every department store’s collection will be marked down substantially.
Chinese travel spending worth looking out for: We believe Chinese outbound spending will continue this Christmas, and the depreciation of the yuan would do little to buck the trend. According to advanced booking data from Chinese OTA (Online Travel Agent), overseas tour bookings that include shopping in outlets increase 75% year-over-year. We expect the US, Europe and Japan will remain popular shopping destinations this holiday season.
Associate Professor Sean Sands, Managing Director of the ACRS Research Unit and Associate Professor of Marketing at Monash Business School
Australian retailers are expecting an increase in trade for Christmas 2016 compared to the same time last year. According to the Australia Retailers Association (ARA) and Roy Morgan Research, the annual Australian Christmas shopper figures are expected to be in excess of $48.1 billion, for trade between the period November 15th to December 24th. This compared to retail spend on Christmas in 2015 of $47 billion, or a 2.3% sales increase for 2016. The strongest retail categories are expected to be clothing, accessories, and footwear this Christmas period.
The ACRS Research Unit recently conducted Christmas shopping research with 500 consumers and found that 21% of shoppers expected to spend more this year. Across the majority of categories, shoppers indicated that they intend to spend the same amount this year, though for big-ticket items, 40% of shoppers intend to spend less. Categories that shoppers intend to spend more on include toys, clothing, accessories, and footwear, and food and drink. The majority of shoppers (51%) report being organized in their shopping and doing their Christmas shopping in early to mid-December.
Lawrence Pinto, Managing Editor, Images Retail Middle East
The Gulf Cooperation Council (GCC) states of Saudi Arabia, United Arab Emirates (UAE), Kuwait, Qatar, Bahrain and Oman have been experiencing subdued growth, with low oil prices negatively affecting business confidence and government spending. Increasingly depressed business confidence has affected consumer spending and retail sales across the region.
Saudi Arabia, the largest country in terms of oil reserves and population size, saw its consumer spending in the retail sector plummeting by half during 2016. Economic growth forecast for 2017 is 1.9% from 1.5% in 2016. Kuwait too faces a slowdown in economic growth but benefits from a high-income consumer group, which bodes well for retailers expanding into the market.
Qatar's retail outlook is positive and growing household incomes drive robust consumer spending. The luxury market also stands to benefit from a large wealthy consumer base, which is expected to grow significantly over the coming years. The much-delayed Mall of Qatar opened in the second week of December while Doha Festival City is set to open in February 2017.
Despite the reduced number of tourists impacting retail sales in Dubai and Abu Dhabi, total consumer spending is expected to grow by 7.7% in 2016. Although some forecasts predict retail sales to flatten in 2017, a Dubai Chamber of Commerce and Industry report expects the retail sector to grow by 5%. Major retailers are expanding by opening new stores, developers such as Majid Al Futtaim and Nakheel have announced new malls, and two major theme parks – IMG Worlds of Adventure and Dubai Parks and Resorts – were opened in the third and fourth quarters of 2016.
Robin Lewis, Chief Executive Officer, The Robin Report
According to some experts and retail executives, the good news for an increase in holiday shopping is the convergence of several positive stimulants: cold weather, pent up demand, a soaring stock market, gas prices staying low, inventories under control and two extra days between Thanksgiving and Christmas and Christmas and Hanukkah on the same day.
My view is that horrific over-capacity continues to grow with no commensurate growth in demand, thus "secular stagnation" (economist Larry Summers prediction of 1.5- 2% GDP growth for years to come). This over-supply has, and will, continue to drive insane price promoting - this Holiday is no exception. So, even with lean inventories - with no robust demand, retailers will have no pricing leverage, thus margins will continue to be squeezed. And the so-called "gas bonus" has been debunked by several research findings. Finally, a soaring stock market might give a bump up in the luxury sector, but there is no indication that it's sustainable, simply because they don't really need anything (read: too much stuff already).
So, my prediction is that growth over the last year will be 2- 2.5%. But, positive bottom lines will be hard to find.
Roberto Meir - Grupo Padrão
All surveys and data confirms that the Brazilian political crisis is very deeply affecting the retail business. Due to the lack of stability in the political and economic environment, the Christmas sales will drop by around 3.5% compared to 2015.
The unemployment rate going up to 12% has affected consumer expectations. Credit is still very short, but finally it seems that the inflation rate has been controlled and the forecast for 2017 indicates that it will stay below 5%. Consumer debt is still very high and consumers are very hesitant to spend: 63% of Brazilians will spend less than 2015. Sales on Black Friday grew by 11%. Besides that, Brazilian retailers find it has a negative impact on Christmas sales, once consumers take advantage of better prices during the sale season. The forecast indicates a drop of 6.5% in retail sales in 2016.
Ecommerce is performing much better: sales forecast are 14% up for this Christmas. 2016 was another lost year for Brazilian economy. The government is working hard to implement big reforms. Restriction on government spending was approved and the next step will be the approval of the new Brazilian Social Security Program. This will be a very tough job. If it succeeds, Brazilians can hope and expect some residual growth in GDP of 0.5-1.0% next year. Some light begins to show up in the very dark and debilitated Brazilian economy.