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Retail revival

Consumers are back shopping, if the rise in electronic transactions has anything to do with it.

National Australia Bank (ASX:NAB) has reported a massive jump in the number of ATM and EFTPOS transactions over the Christmas to Australia Day holiday period.

Total transactions rose 17.5% over the previous year, to 164 million, in what must be a good sign for retailers. 140 million transactions were recorded in the 2011-12 holiday season.

Whether the jump in transactions was spurred by post-Christmas sales, is hard to determine – retailers usually face a quiet month or so after the Christmas shopping period, so may have extended sales and marketing campaigns to encourage consumers to keep spending during January.

We’ve already seen Specialty Fashion Group (ASX: SFH), which owns women’s fashion stores such as Katies and Millers, report a rise in sales for the half year ending December 2012, with net profit after tax expected to almost triple from $6m to between $17-$18 million.

After receiving a wake-up call, Australia’s retailers appear to be more focused on getting customers into both their bricks-and-mortar stores as well as online. An invasion of international retailers, consumer appetite for online shopping and a more cost focused and brand-aware consumer means retailers have to fight harder than ever to bring in sales.

Retailers like Premier Investments (ASX: PMV), owner of Jay Jays and Smiggle and department store retailers David Jones Limited (ASX: DJS) and Myer Holdings (ASX: MYR) have ramped up their online offerings, sought price discounts from suppliers, negotiated cheaper rents and cut excess costs out of their businesses.

The moves may be paying dividends, and helped by lower interest rates, consumers may be choosing to shop ‘Australia’ rather than from offshore, online sites.

Foolish takeaway

As we move into reporting season over the next 4 weeks or so, the results should become clearer as retailers report their sales and profits over the last six-twelve months. The retail revival may be on, and Foolish investors may want to take a closer look at the sector.

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More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in David Jones.

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