Trading Winners Susceptible to Online Disruption

The 2016 retail Christmas trading period has been described as lackluster, however two retailers did manage to shine bright. Myer and JB Hi-Fi were the trading winners in Australia over the recent holiday season.

We won’t really know the wash up until the interim finance figures are released by retailers in February, but the Citi report says that JB Hi-Fi and Myer have had a very merry Christmas when it comes to retail trading performance during the peak shopping period.

Myer’s star performance can be largely attributed to its Giftorium, its online gift shopping portal and in-store services such as its gift-wrapping bars as well as its personalised offerings such as personalised Ken and Barbie Dolls and monogrammed Nutella jars.

JB Hi-Fi did really well over December despite Harvey Norman slashing its prices. In addition, it picked up market share due to Dick Smith going into administration.

“JB Hi-Fi has been significantly more targeted with its promotional activity, focusing on large discounts on a small range (of products),” the Citi report said.

JB Hi-Fi had “continued to benefit from the Dick Smith market share tailwind,” the report said, but “this benefit is now dissipating”.

With regards to Myer, the multichannel is still in the midst of its five year turnaround plan, however it still showed some profits.

Whilst both retailers were the winners during the Christmas trading season, they are still very much susceptible to online disruptors, as with the retail landscape in general.

Online shopping events such as Click Frenzy and Black Friday sales, and the increasing number of consumers who are organizing their Christmas shopping earlier in the year (driven by online shopping and the need to ensure parcels arrive in time for Christmas), has brought sales forward into November for many retailers.

In addition, Amazon is speculated to expand into Australia later this year in September, and the US warns that bricks and mortar chains will be adversely affected.

The Citi reports says that the likely arrival of Amazon in Australia could see Myer and JB Hi-Fi’s earning potential drop by 23 percent.

 

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