Christmas bonanza predicted
Supply chain a problem
AUSTRALIANS are expected to spend $59bn in the lead up to Christmas but retailers have warned that some goods will be in short supply due to global freight constraints.
Endeavour Group, which operates the Dan Murphy’s and BWS chains as well as more than 340 pubs across the country, said major supply chain disruptions are limiting its access to some beverages, particularly imported drinks such as liqueurs and spirits.
Endeavour chief executive Steve Donohue said the company had allowed for greater lead times when importing products to try and mitigate supply issues.
“Inevitably there will be some relative minor impacts on sales due to availability, there is just no two ways about it because as much as I would like to think everybody will switch into an alternative product, that is not entirely true,” he said.
Discount retailer The Reject Shop has warned supply issues caused by the pandemic would likely continue through to June, affecting stock availability in its stores and adding costs to the business.
Chief executive Andre Reich said after the retailer’s annual meeting on Wednesday that supply chain constraints had worsened since last year and that product shortages were being caused by several factors including access to shipping containers, Covid-19 exposures at ports and many of his own suppliers facing delays on raw materials.
“Pleasingly, our initial Christmas stock has arrived and is now set up in-store,” Mr Reich said.
The Reject Shop incurred about $9m in higher than anticipated and unbudgeted international supply chain costs in the 2021 financial year.
Super Retail Group said it had sales declines across the board due to Covid lockdowns and was also warning of margin pressure due to supply chain challenges.
The outlook is positive in the lead-up to Christmas
Paul Zahra
The auto parts, fitness wear and outdoor gear retailer said like-for-like sales growth for the first four months of the 2022 financial year declined 12 per cent across its brands when compared to 2021, but lifted 10 per cent on the 2020 figures.
The largest sales decline – 13 per cent – was at its flagship Supercheap Auto Brand, which booked a sales surge last year as international border closures revived family car holidays.
“Freight and logistic costs associated with elevated levels of inventory could affect future gross margin as the outlook for supply chain remains challenging,” Super Retail chief executive Anthony Heraghty told the retailer’s annual general meeting.
Adairs chief executive Mark Ronan warned that the forced closure of stores from Melbourne to Auckland since July had cost the home furnishings retailer as much as $32m in lost sales.
The value of those lost sales to its earnings was between $12m and $15m.
In a trading update, Mr Ronan said total group sales for the 16 weeks to October 17 were 8.5 per cent lower than 2021 but 8.2 per cent higher on a like-for-like basis.
Mr Ronan said electing to bring stock in early, together with carrying additional inventory in core lines and being prepared to pay higher than usual freight costs had ensured Adairs was in a strong inventory position.
Online retail group Kogan.com reported that its once-rocketing sales growth continued to slow during the September quarter, although its warehouse and inventory issues that caused headaches last year have improved.
Gross sales during the quarter grew to $330.5m, up 21.1 per cent over the prior corresponding period and were about 23.2 per cent higher quarter on quarter. It achieved sales growth of more than 100 per cent in the early months of the pandemic.
The Australian Retailers Association and research firm Roy Morgan have predicted pre-Christmas spending (from November 13 to December 24) would come in at about $58.8bn, broadly matching last year, but 11.3 per cent up on 2019 figures.
ARA chief executive Paul Zahra said most of the growth this year would be driven by clothing, as well as restaurants and hospitality, as consumers yearn for a return to some kind of normality and socialising.
Tasmania is predicted to have the strongest forecast sales growth for the pre-Christmas period, up 4.2 per cent and South Australia the lowest, down 2.9 per cent.
“Overall though, the outlook is positive in the lead-up to Christmas and there’s a lot to be cheerful about in this year’s predictions,” he said.