Wednesday, February 28, 2024

Aussies to spend $9b in final festive week

Retailers are set to bring in $9 billion in sales in the final week before Christmas, according to the Australian Retailers Association (ARA).

The pre-Christmas re-forecast by the ARA, in conjunction with Roy Morgan, is slightly up on last year, reaching $67.4 billion (up 1%) for the November to 24 December trading period. The original forecast has moderately improved after a bumper Black Friday extravaganza and December’s interest rate reprieve.

Across the pre-Christmas period, food spending is forecasted to encompass the lion’s share of spending, making up $27 billion of the overall spend, up 3.2% from 2022.

The categories of household goods (down 3%) and hospitality (down 1.5%) are forecasted for a continued softening of spending in the lead up to Christmas as cost-of-living pressures continue to hold.

Department stores are projected to lead spending growth (up 3%), followed by other retailing which includes categories such as recreational goods, books, cosmetics (up 1.6%) and clothing (up 0.6%).

South Australia is set to record the biggest growth in sales on last year (up 2.6%). This is followed by the ACT (up 2%), Western Australia (up 1.6%), the Northern Territory (up 1.2%), Victoria (up 1.2%), Tasmania (up 0.9%) and NSW (up 0.7%). Spending in Queensland (up 0.2%) is tipped to record close to neutral growth.

ARA CEO Paul Zahra says retailers built momentum during the successful Black Friday sales.

“November trading by all accounts appears to have been strong, despite cost-of-living pressures, as shoppers capitalised on unprecedented deals and sales to tick off their Christmas lists early, and this has helped prop up our pre-Christmas projections somewhat,” he says.

“With that said, we’re still anticipating overall a subdued Christmas, with most Australian households now turning their attention to Christmas day and finalising their fresh food choices with seafood being at the top of the list.

“The slight increase in spending this year is being inflated by unavoidable supply chain price increases, particularly in food, and an overall increase in Australia’s population. If you exclude these factors, overall Christmas spending is in decline.

“This makes for a competitive last week before Christmas among retailers, as traders compete for a smaller pool of discretionary spend.

“For most discretionary retailers, up to two-thirds of their profit is made during the all-important Christmas trading period, so December remains a period of uncertainty.

“This holiday period can be a make-or-break for many discretionary retailers.”

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