‘A good story for consumers’: Discounts on the way as spending slows

Mid-market retailers including Best & Less, Baby Bunting and Michael Hill International have also updated the market over the past month to reveal that they are facing a softening spending environment.

The director of retail strategy consultancy Retail Oasis, Trent Rigby, said many retailers appeared to be preparing to ramp up discounting towards the latter half of this year.

“Smaller wallets mean that retailers have to work harder to take an increased share of this spend, which often results in a lot of short-term sales promotion activity,” he said.

This means shoppers can expect big sales well before the Christmas trading season, which these days kicks off as early as October.

Customer experience expert and founder of data consultancy Fifth Dimension, Lyndall Spooner, said the rising costs for business would also play a role in the frequency of sales for the rest of the 2023 calendar year.

“The cost of warehousing is increasing, so businesses are moving to try and reduce their stock volumes to cut expenses. As a result of ongoing and more regular sales, consumers know they can wait for a sale before they need to buy.”

Analysts believe that consumers’ increasing focus on price in these conditions could deliver further advantages to the company many believe is the biggest threat to legacy retailers: Amazon Australia.

In a note to clients on Harvey Norman’s sales update last week, Morningstar retail analyst Johannes Faul noted that electronics retailers were facing increasing competition on price from overseas competitors.

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“Consumers show little distributor loyalty as they seek the lowest price. Over time, we think a few major online distributor channels, such as Amazon Australia, could take the largest share of the Australian online retail market,” he said.

Amazon is upbeat about the role of sales in the current environment and will kick off its Prime Day event for members later this month.

“Aussies are a bargain-oriented bunch,” Amazon Australia country manager Janet Menzies said in June. “That adrenaline feeling that you get from treating yourself to something at a price that you perhaps didn’t imagine is definitely part of making sure that people receive our offer as valuable.”

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