Wednesday, May 29, 2024

Bumper Black Friday predicted despite household headwinds

Australians are expected to splash out and spend through this year’s Black Friday and Cyber Monday sales period, despite the backdrop of rising cost of living, increased interest rates and talk of a looming recession, according to KPMG.

Still, consumer spending may start to fizzle into the pre-Christmas spending period, in what could prove to be a challenging holiday season for retailers.

“Strong employment and income growth are helping consumers push back against the current headwinds, and while these pressures are growing it looks like holiday-period retail spending will at least match 2021,” says KPMG Senior Economist Sarah Hunter.

“I expect we’ll see total spending at least match last year, given the latest data and where our forecast models are pointing.”

Retailers across the board are expected to offer large savings in a bid to lure consumers in late November, with Black Friday scheduled for November 25 followed Cyber Monday on November 28.

KPMG Head of Retail Lisa Bora says that given that we are expecting an early peak in spending, retailers should remain laser focussed on offering value, not just discounts, between now and the end of the year.

“Communicating that value for money proposition consistently, is going to be crucial in encouraging customers to continue that spending momentum the lead up to Christmas,” she said.

“Channels of delivery, be it online or in store, need to focus on speed and convenience in what is expected to be a busy spending period, to meet increasing customer expectations.”

Ms Bora warned that delivery bottlenecks are still expected due to an ongoing shortage of sea containers and Covid disruptions in China.

“Any restocking will need to be done earlier than normal to offset the potential for delays in shipping,” she said.

“Just having excess stock available is not a guaranteed way of ensuring shelves remain full. Retailers should carefully manage inventory so that products are stored close to where they are in highest demand to smooth out logistics and increase speed at the point of sale.”

The Black Friday and Cyber Monday sales events have helped November become one of the busiest months for retailers.

Last year, consumers nationally spent more than $3B on clothing, footwear and personal items through November, compared to $2.6B that December, according to ABS figures.  Australians spent more than $6.4B on household items for the month, compared to nearly $5.8B in December.

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