Retailers expecting big Christmas spending spree

The ARA holiday sales predictions with Roy Morgan forecast a record-breaking spend in the lead-up to Christmas that is up 6.4 per cent on last year’s spending.

ARA chief executive, Paul Zahra, said higher numbers are driven largely by price increases as well as stronger food and hospitality spending as Aussies enjoy their post-pandemic experiences.

“These are great results, however, it’s important to acknowledge that price increases are a factor in these numbers and are also driving Australians to spend to get in ahead of inflation,” Mr Zahra said.

Out of the states and territories, NSW, Victoria, and Queensland have driven most of the projected spike in spending. NSW is set to record a 20.8 billion spend (up 7.7 per cent), followed by Victoria with 17.1 billion (up 5.2 per cent), and with Queensland spending predicted to top 13.5 billion (up 6.8 per cent).

With the Reserve Bank expected to raise official interest rates again today (6 December) to a 10-year high of 3.1 per cent, policymakers believe Australians will go on a spending binge at the first Christmas since 2018 unaffected by events that have curbed expenditure for the past three holiday seasons . The past three Christmases have been the worst on record for retailers, with sales falling in the Decembers of 2019, 2020, and 2021. Sales also fell by 3.3 per cent in December 2020 and by 4.1 per cent last December as pandemic restrictions curbed the spending opportunities of Australians.

The research is expecting consumers to ramp up spending on ‘sensory indulgence’ this festive season as alcohol and food top the spending wish list.

The ARA said men were more likely to indulge in alcohol or food purchases compared with women who will be targeting inexpensive gifts or novelties, clothing, shoes, sleepwear, books and music.

“Aussies truly plan to eat, drink and be merry this Christmas. It’s no surprise we are seeing a shift towards food and entertaining with the holiday period over the past two years spent in the shadow of lockdowns,” said Mr Zahra. “The news couldn’t come at a better time for the hospitality sector who have endured more pain than most businesses through the pandemic.”