Pre-Christmas sales forecast up on last year

Australian retail sales are set to remain strong over the festive trading period, with consumers to continue spending in the face of cost-of-living challenges, according to expert insights.

The most comprehensive Christmas insights ever released by the Australian Retailers Association (ARA) in collaboration with strategic partners Roy Morgan and Salesforce forecast Australians to spend $63.9 billion in the pre-Christmas sales period (November 14 – December 24), which is up 3% on last year.

Food retail (supermarket, grocery stores, liquor, and other specialised food retailing) is expected to see $24.8 billion of this spend, up 1.8% on last year.

ARA CEO Paul Zahra said the forecasts point to upbeat trading conditions in the run up to Christmas.

“Retail sales are running at record levels at the moment, and our forecasts show sales will remain strong for the remainder of the year,” he said.

“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.”

Industry resilience

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

“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,” she said.

“Hospitality is a standout sector with forecast growth of 16.3% 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,” Ms Levine said.

Early spending

According to Salesforce’s Holiday Insights Hub, inflationary pressures and climbing interest rates will kick start holiday shopping earlier in Australia and New Zealand, with 33% of holiday sales forecast to occur in the first three weeks of November – before Cyber Week even begins.

Salesforce also forecasts:

  • 84% of sales will take place prior to the week of Christmas.
  • 25% 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%.
  • 70% of all traffic and 60% of all orders to occur on a mobile device during the holiday season.

Trimming budgets ahead of splurge

According to research released by the National Retail Association, Australian consumers are cutting back on luxury goods and services, looking for bargains and switching to cheaper brands as they battle rising inflation.

However, shoppers are still gearing up for a bumper pre-Christmas sales season with almost half feeling confident and one in five planning to outspend last year.

The NRA’s Consumer Sentiment Report, prepared in conjunction with the Retail Doctor Group, found 71 per cent of consumers had changed their spending behaviour because of rising costs, and that purchasing decisions during the upcoming sales events would be driven largely by the discounts and offers available.

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