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Retailers set to enjoy a festive season that’s merry and bright

Retailers look set to share in some welcome Christmas cheer, with Australians expected to fork out a total of $58.8 billion in the lead-up to the festive season.

According to a recent joint survey by Roy Morgan and the Australian Retailers Association (ARA), the total expenditure will remain on par with last year but is an increase in pre-pandemic Christmas spending.

Here’s a breakdown of what experts are predicting over the festive season ahead…

retailers set to enjoy a festive season
November 30, 2021

 

A record high

Last year retailers enjoyed a record festive season of spending, and experts were hesitant to predict 2021 could match those levels.

However, the recent joint survey by ARA and Roy Morgan indicates this year will be on par with last as shoppers look set to reward themselves and their families after another trying year of lockdowns.

The $58.8 billion predicted expenditure is 11.3 per cent higher than pre-pandemic conditions and the Christmas expenditure reported in 2019.

“There’s a lot of Christmas cheer in these numbers, with the overall trend looking positive, and that is great news for small businesses and discretionary retailers who have suffered through some of the longest lockdowns in the world this year,” ARA CEO Paul Zahra said.

“The Christmas trading period is critical as it’s the time when most discretionary retailers make up to two-thirds of their profits for the year.”

 

Finally, some good retail news

Roy Morgan CEO Michele Levine said the anticipated spending was good news for Australia:

“Our sales forecasting reveals a country on the move; a consumer economy is exhibiting all the signs of pent-up demand.

some good retail news 2021

“No one believed that spending this coming Christmas could match the highs of last year, but as the population emerges from the most punishing crisis in a hundred years, shoppers are looking to reward themselves and their families.

“The sales aren’t all going to be instore, however. The COVID five-year digital acceleration means many more Australians are shopping online, so this Christmas we will see much more of a mix between in-store and online shopping,” Ms. Levine said.

 

Making up for lost time

The Roy Morgan data also values (for the first time) the impact of the most recent lockdowns on retail trade at $131 million per day across the economy.

“Unsurprisingly, these impacts have been most keenly felt in NSW and Victoria, at $40.4 million and $55.2 million per day, respectively. And it’s also unsurprising that the most impacted categories were hospitality and clothing, footwear and accessories, at $71.7 million and $55.7 million per day respectively,” Mr. Zahra said.

“These impacts will continue to weigh on annual growth in retail trade and will be compounded by the reduction of Government stimulus payments and the end of ‘mortgage holidays’ for tens of thousands of Australians in coming months. We also have to remember that the sector is cycling some very high numbers off the back of Christmas last year’s bumper.

“Overall though, the outlook is positive in the lead-up to Christmas and there’s a lot to be cheerful about in this years’ predictions.

“With elevated online sales, suppressed shopping demand, global supply chain disruptions and local delivery issues, the key message to consumers for this Christmas ‘tis the season to shop early,” Mr. Zahra concluded.

 

Key verticals

Food retail is expected to enjoy the lions share of expenditure, with Australians likely to spend a total of $23.915 billion on groceries (down 0.3 per cent in 2020).

retailers set to enjoy a festive season

That’s followed by:

  • Household goods – $10.145 billion (down 7.1 per cent on 2020)
  • Clothing, footwear and accessories – $4.271 billion (down 1.1 per cent on last year)
  • Department stores – $3.092 billion (down 7.9 per cent on the previous year)
  • Other retailing – $8.945 billion (up 2.3 per cent on last year)

With lockdowns lifting and venues reopening to the vaccinated, hospitality is expected to be the vertical that will benefit most significantly from the additional expenditure.

This Christmas, Australians are tipped to spend $8.015 billion on dining out, which is a 12.3 per cent increase in 2020.

 

Online versus instore

With the Christmas countdown well and truly underway, much of the shopping list is set to be purchased online.

Australia Post recently noted 79 per cent of online shoppers who do Christmas gift shopping expect to be buying online this year and will purchase almost two-thirds (62 per cent) of all their gifts this way.

“This is a significant increase when compared to 2019, where online shoppers purchased about half of their Christmas gifts online,” Australia Post reported.

Their research indicates shoppers are also heeding advice to do Christmas shopping earlier this year.

In a survey conducted in September, they found 22 per cent of respondents stated they would do their Christmas shopping in October, compared with 16 per cent in 2020.

“November remains the peak time to purchase Christmas gifts online, with two in five respondents indicating this is when they would shop,” Australia Post said.

Their survey also found 25 per cent of people planned to do their shopping in the four weeks leading up to Christmas, down from 29 per cent in 2020.

“This is still a significant number, suggesting the importance for businesses to have express and Click & Collect options available,” they said.

 

What people will buy

The Australia Post survey also took a deep dive into the type of gifts Australians were considering.

retailers set to enjoy a festive season

Their research found:

  • Clothing and footwear would be the most purchased items – 38 per cent
  • Toys were next on the list – 35 per cent
  • Entertainment (books, music & movies) also remains popular – 34 per cent
  • Over a third of respondents intended to purchase some form of a gift card or voucher for loved ones – 34 per cent
  • A quarter of survey respondents intended to purchase cosmetics, perfume, or beauty products – 25 per cent
  • Alcoholic drinks (e.g., beer, wine, spirits, etc.) – 22 per cent
  • Gift experiences (e.g. spa treatment) – 21 per cent
  • Gift baskets or hampers – 20 per cent
  • Homewares (including manchester/lighting/furniture) – 19 per cent
  • Consumer electronics – 18 per cent
  • Jewellery / watches / fashion accessories – 18 per cent
  • Food – 17 per cent
  • Homemade / personalised gifts – 15 per cent
  • Sporting Products (i.e. equipment etc.) – 14 per cent
  • Craft and hobby supplies/products – 14 per cent
  • Stationery – 11 per cent
  • Collectables/memorabilia – 10 per cent
  • Pet supplies products – 8 per cent

The Christmas retail period encompasses the six weeks leading up to December 25, and you can read our top tips on preparing your retail outlet for the influx of shoppers here.