IN a battle for the hearts and wallets of Australian consumers, it appears that small and medium retail businesses are leading the way following strong sales performances during December, particularly in the hospitality sector.
Chief executive of Tyro, an independent EFTPOS banking institution, Gerd Schenkel, says that based on customer data from 16,000 businesses, Australians are increasingly looking for personal touch and charm when deciding which businesses they want to purchase from.
Although the Australian Bureau of Statistics (ABS) has not yet released Christmas sales figures, Tyro's own customer data analysed in the context of the broader market found that SME retailers processed about $23.5 billion in sales in December, a three per cent increase on the same period the previous year.
Furthermore, in the hospitality sector, December sales for SMEs increased by 10 per cent to $8 billion from the previous period a year ago.
"It seems David is beating Goliath when it comes to the hearts and minds of Aussie consumers, as personalised hospitality beats the often homogenous and soulless experience of some large chains," Schenkel says.
The Australian Retailers Association and Roy Morgan Research predicted late last year that Christmas spend was to hit the $48.1 billion mark, a 2.3 per cent forecasted jump in December sales from the same period the previous year.
Whether Christmas sales across Australia actually achieved this mark will not be known until the ABS release its December spend figures next month.
Schenkel expects small and medium businesses to continue performing well in the near future. He estimates SME hospitality sales will reach $80 billion this financial year, compared to only $24 billion in projected sales for larger hospitality businesses.
"This was a cracking finish to 2016, and we expect more of the same over the coming six months to the end of the financial year," he says.
Russell Zimmerman, Executive Director of the Australian Retailer Association predicts a "reasonably positive and buoyant" 2017 in retail sales.
Speaking to Business News Australia, he says that retail sales this year are likely to be up by about three per cent from the previous year despite intense competition within the food sector creating downward pressure on food prices.
"When looking at the statistics, what stood out strongly was that fast food, hardware and clothing/footwear has been doing particularly well. A sign that discretionary spend is on the rise," says Zimmerman.
"One concern however is food. It is hovering at around only plus two per cent (year on year). If you take into account the fact that food, which represents about 40 per cent of the retail spend, is under quite a bit of pressure to keep prices low, then in actual fact, the retail sector is not looking bad at all."
Late last year, a survey of 52 senior executives of retailers across Australia by Deloitte found that the overwhelming majority (64 per cent), expected store earnings to increase by five per cent or more in 2017. Deloitte says such optimism is the highest it has ever seen since the yearly survey was first commissioned five years ago.
Get our daily business news
Sign up to our free email news updates.