Hot retail trends for Xmas and 2008 as retail sector grows

Australians are will spend a staggering $19.8 billion this month in the lead up to Christmas, up 6.5% from last year, despite a change in government and higher interest rates, according to business information analyst IBISWorld.

Electronic games and toys, GPS systems, digital TV set-top boxes, and espresso machines are all likely to be popular choices for big spenders for Xmas.

And next year is predicted to be even better thanks to newcomers. IBISWorld general manager (Australia), Jason Baker, predicts retail sales will increase by a further 4% in 2008, driven by a few newcomers to the market.

Costco arrives

Costco, the US-based retail giant with 523 locations (489 in the Americas, 19 in Britain, six in Japan and five in South Korea), opens its first Australian outlet in Melbourne next year.

“We can expect to see up to five Costco stores open by the end of 2008,” says Baker, “and the breadth of products they’ll supply will have a marked effect on a number of local retailers, including department and specialist stores, supermarkets and jewellers.

“Electronics outlets such as Dick Smith and Harvey Norman will also feel the heat, and we believe the Australian debut of so-called ‘megastores’ will truly change the retail scene in this country over the next decade.”

Costco is a “warehouse club” which sells products at high volume, and low prices, with goods typically bulk-packaged and marketed to families and businesses. To shop there buyers purchase an annual membership, which is likely to be around $100 a year.

Baker says the response will be interesting to watch, since other attempts at “superstores” in Australia have failed miserably.

Aldi to grow

Discount grocer Aldi is another name to watch in 2008, according to IBISWorld, with its private label products becoming increasingly popular with Australian households.

Aldi opened two stores in Maryborough and Marsden in Queensland last week, and on Thursday will open three more outlets in the state. The group aims to have 50 stores across the state by the end of 2008 in areas with a population of about 20,000 residents.

Baker says that as higher interest rates continue to affect lower-income households, more and more people may begin shopping at Aldi. And given the chain’s expansion plans, IBISWorld expects revenue to increase at a double-digit rate this financial year.

Hot products in 2008

TiVo is a digital video recorder service that lets consumers fast forward advertisements, record programs from any free-to-air digital channel, pause live high-definition TV, and access broadband content such as video-on-demand. It’s likely to cost around $400, plus a monthly subscription fee of $10.

It has been a phenomenal success in the US and Baker expects a similar take up here.

Digital radio is also likely to be a hot product for the future because of its improved sound quality (although IBISWorld predicts initial demand will probably lag behind manufacturers’ expectations in a repeat of the situation with the introduction of digital TV).

However, Baker says that if manufacturers can price digital radio in an appealing way, it could be the hot product for 2009.