Spending boom predicted for Christmas with sales to reach $63.9bn

The Australian Retailers Association in collaboration with Roy Morgan and Salesforce conducted a comprehensive Christmas insights report that has found that in the period between 14 November and 24 December, Australians will part with nearly $64 billion.

Hospitality businesses are set to flourish in the run-up to Christmas, with over $9 billion in trade — up 16.3 per cent on 2021.

South Australia is set to record the biggest growth in sales on last year (up 6.6 per cent), followed by the Northern Territory (up 6.5 per cent). Consumers in NSW are forecast to spend nearly $20 billion in the pre-Christmas sales (up 3.1 per cent on 2021), with Victorians to fork out $16.5 billion (up 0.8 per cent) and Queenslanders $13.3 billion (up 4.6 per cent).

According to Salesforce’s Holiday Insights Hub, which tracks holiday shopping and commerce trends from November to December, inflationary pressures and climbing interest rates will kick-start holiday shopping earlier in Australia and New Zealand, with 33 per cent of holiday sales forecast to occur in the first three weeks of November — before Cyber Week even begins.

The survey also found that 84 per cent of sales will take place prior to the week of Christmas and 25 per cent of all the sales during the holiday period will take place during Cyber Week.

The average discount rate will be highest during Cyber Week, averaging 22 per cent and 70 per cent of all traffic and 60 per cent of all orders to occur on a mobile device during the holiday season.

ARA chief executive Paul Zahra said Christmas is the most critical time of year on the retail calendar and given the financial pressure households are under at the moment, many businesses were feeling nervous about a potential downturn in spending over the festive period.

“However, the good news is that consumers are set to continue opening their wallets in the face of cost-of-living pressures with $63.9 billion to be spent in stores and online in the lead up to Christmas — a 3 per cent increase on last year,” Mr Zahra said.

“Retail sales are running at record levels at the moment, and our forecasts show sales will remain strong for the remainder of the year. There’s a delayed lag associated with rising interest rates and inflationary pressures, so there will inevitably be a softening of sales, but it appears that won’t occur until next year. 

“While businesses are combating record levels of labour shortages and supply chain constraints, there’s still plenty to be optimistic about this Christmas. The Cyber Weekend sales are growing in popularity every year, and that’s set to provide retailers with good momentum for their festive trade.”

Roy Morgan CEO Michele Levine said the retail industry has proved resilient in 2022 despite the heavily discussed pressures of rising interest rates and inflation.

“There was plenty of concern earlier in the year that the RBA’s decision to increase interest rates at the fastest rate since 1994 would severely dent retail sales during the closing months of the year, and especially in the lead-up to Christmas. Roy Morgan’s forecast pre-Christmas retail sales of $63.9 billion, an increase of 3 per cent points on last year’s record sales, show the strength of the Australian consumer is set to power through these challenges,” Ms Levine said.

“Retail sales have been exceptionally strong during the last few months as consumers continue to benefit from the high level of savings built up during the pandemic from extensive government stimulus programs and the lowest level of unemployment in 50 years allows consumers to continue spending despite the financial pressures of inflation and higher interest rates.

“Hospitality is a standout sector with forecast growth of 16.3 per cent on a year ago to expected total spending of over $9 billion as Australians are set to enjoy the freedom of an Australian summer without any pandemic related restrictions crimping trade in the pre-Christmas period.”