TRANSCRIPT
Retailers are expecting to make AU$9 billion in sales in the final week before Christmas.
The Australian Retailers Association says the forecast for retail sales in November-December 24 trading period is 1 per cent higher this year, reaching $67.4 billion.
The modestly improved outlook is due to strong Black Friday sales in November and December’s interest rate reprieve.
Food spending is the biggest category - at $27 billion. That's a 3.2 per cent increase from last year.
Spending is expected to be reduced for household goods (down 3.0 per cent) and hospitality (down 1.5 per cent) due to cost-of-living pressures.
The CEO of the Australian Retailers Association, Paul Zahra, says consumers are more budget-conscious this Christmas than in previous years.
“We're expecting Australians to spend $67.4 billion pre Christmas this year, that's about 1 per cent up on last year, so fairly subdued. But when you dig into the detailed, the average Christmas spent per person is forecasted to be $646, and that's down from $700 to previous year.”
The chief economist for AMP, Shane Oliver, says cost-of-living pressures are one of the main reasons why customers chosen to do their Christmas shopping early.
“When you've got tough economic conditions for households, they're on the lookout for sales. People say,well, I didn't use to worry about the sale so much, but now I want the bargains, I'm only going to spend if I can get a bargain. And so they put more weight on the sales. Consequently, the advent of Black Friday and Cyber Monday has moved some of that spending out of the Christmas rush period into November.”
Even so, retailers are expecting Boxing Day to be a strong trading day.
Nearly half of consumers surveyed by the Commonwealth Bank are planning to take advantage of the sales on Boxing Day on December 26, with 49 per cent of the 1004 respondents saying they'll be hunting for discounts.
This compares with 42 per cent who said they were keen on the post-Christmas sales in 2022, and 40 per cent in 2021.
Mr Zahra says for discretionary retailers, up to two-thirds of their profit is made during the all-important Christmas trading period.
He says there are patterns in the consumer purchases made on Boxing Day.
“When it comes to Boxing Day, people are looking to spend money on themselves and for their own household. And we know that a lot of household goods particularly are in great need, but equally as things like clothing and apparel where we're ending the season and retailers are wanting to clear out the current seasons merchandise.”
It seems like many Australians are changing their spending habits, but this is especially true for families who have been struggling severely with the current economic situation.
Edwina Macdonald is the acting executive director of the Australian Council of Social Service.
She has called on the federal government to better support Australians on low incomes ahead of Christmas.
“So we're asking for urgent an increase to income support payments to bring those up in line with the pension of $78 a day. We're calling on the government to increase funding to community services to be able to support people in times of need, and also to look at ways to reduce energy costs for people on the lowest incomes.”
Mr Oliver says he is not anticipating a huge lift in Boxing Day retail figures this year.
“I don't think the Boxing Day sales, which is still in the month of December, of course, will be enough to offset that. And we certainly saw that a year ago, people were still out there in the blank on the Boxing Day sales, but it didn't quite have the same punch that it used to. In fact, we've seen this the last three years now.”
The slowdown in holiday shopping could even affect Australia's economic growth.
Mr Oliver again.
“It's bad news for the economy to some degree. I guess you could argue the Reserve Bank, the central bank wants to see a weaker economy, wants to see less spending to cool things down to call inflation down. But it does mean a tougher time, particularly for retailers, as people spend less. And don't forget, the consumer spending in Australia is about 60 per cent of overall spending, so it's a big chunk of our economy, its the biggest single component, and obviously when the consumer households are under pressure, that obviously leads to lower growth, and of course, that affects broader economic growth.”
