Amazon Christmas impact overstated

THE nation’s bricks and mortar retailers have enjoyed a better than expected Christmas trading period, with new competitor Amazon failing to ruin their festivities.

A Christmas review by a top investment bank has concluded the retail sector posted a “solid” result for the most important trading period of the year, despite a gloomy lead-in throughout November and early December.

“Try as he might, the Grinch couldn’t steal Xmas – and neither could Amazon,” Deutsche Bank retail analyst Michael Simotas said in a report for investors.

The pre-Christmas launch of Amazon, a series of soft sales updates and the high-profile profit downgrade by Myer last month raised fears the retail sector faced its worst Christmas trading period since the Global Financial Crisis.

Mr Simotas said feedback from major retailers quizzed in the new year by Deutsche Bank found they had generally posted a stronger result than expected as consumers left their run on the shops to the week before Christmas Day.

“Overall, the feedback was positive and in stark contrast to the weak conditions in late November, with almost every retailer we spoke to reporting solid sales growth over December,” he said.

“The trend across retailers was fairly consistent with a weak first week of December, a better second week and a strong final week before Christmas.”

The post-Christmas sales period had also exceeded most retailers’ expectations by a considerable margin, he said.

The Australian Retailers Association expects the nation to have spent more than $50 billion over the Christmas trading period – from the middle of November to December 24. About

$20 billion would have been spent on food and drink.

The nation’s peak retail association expects shoppers to spend another $17.9 billion during the post-Christmas sales period, from Boxing Day to the middle of this month.

December and January sales figures will be finalised in February.

Mr Simotas said electronics and small appliances again emerged as the most popular gift items as a slew of new products and strong discounts attracted shoppers.

Aggressive discounting by JB Hi-Fi appeared to have been supported by suppliers and planned to ensure the Australian retail giant had a strong response to the arrival of Amazon, he said.

JB Hi-Fi and Harvey Norman emerged as the best performers among listed retail stocks, he said.

The share prices of both companies fell heavily throughout last year amid speculation they would suffer from the arrival of the US online titan.

Speciality retail outperformed department stores, and David Jones appeared to have outperformed Myer “by a wide margin”, Mr Simotas said.

Amazon launched a wider Australian retail offering last month, but a patchy roll-out left shoppers underwhelmed.

“None of the retailers we spoke to noticed any impact from Amazon and (they) commented that the launch seemed rushed,” Mr Simotas said.