Bunnings boss Michael Schneider neatly summed up the uncertainty facing the retail sector heading into the most important period in the trading calendar, Black Friday and Christmas.
“I’d love to have a crystal ball that didn’t look cloudy at the moment, but it is really
cloudy from where we’re sitting,” Mr Schneider told investors after releasing full-year results last month.
Christmas 2021 is shaping up to be even more of a rollercoaster ride for the $350 billion retail sector than Christmas 2020, when lockdowns in Sydney’s northern beaches and record Black Friday sales took the gloss off trading in December.
Consumers are cashed up to the tune of almost $200 billion and keen to spend some of the wealth they have accumulated after months stuck at home and having to cancel domestic and international holidays.
House prices are still soaring and housing turnover, which underpins demand for new appliances, fittings and furniture, remains high, even if many house inspections in locked down Sydney and Melbourne are by appointment only.
Retailers such as Harvey Norman chairman Gerry Harvey believe pent-up demand and so-called “revenge” spending from consumers restricted for almost four months will underpin bumper Christmas sales.
“It will be a boomer because we’ve been closed for so long,” Mr Harvey told Weekend AFR last month after unveiling record sales in the 2021 financial year but a drop in sales in July and August.
But Mr Schneider and Wesfarmers chief executive Rob Scott were more circumspect.
“We’re optimistic about the outlook for Christmas,” said Mr Scott. “There generally is some pent-up demand but what I worry about is the longer-term impact on business and consumer confidence from lockdowns.”
“There have been a lot of people stood down, so lots of people are out of work and that does have a very negative effect on the economy. The current levels of stimulus are a lot lower than last year, so we should be quite cautious and concerned about the longer-term economic impacts if lockdowns were to continue,” he said.
Lockdown restrictions in NSW will likely start to ease from mid-October, when the state is expected to achieve its long-awaited target of 70 per cent double-vaccination for 16-years-olds and older.
Under the state’s reopening road map, retail stores will be able to open up under the one person per 4sq m rule, but unvaccinated people will be able to access only critical retail such as supermarkets and liquor stores.
Australian Retailers Association chief executive Paul Zahra said the road map was a huge relief for retailers, even if uncertainty prevailed.