Aussie retailers anticipate $47.4b surge in Christmas sales

Sales events like Black Friday and Cyber Monday continue to grow in popularity.

Retailers in Australia are expecting a $47.4b (AUD$69.7b) boost in sales during the six-week Christmas peak season, a 2.7% increase from last year, said Australian Retailers Association (ARA).

Research from Roy Morgan showed that more Australians are planning to participate in the Black Friday and Cyber Monday sales from 29 November to 2 December, with anticipated spending of $4.56b (AUD$6.7b) over the four days, up 5.5% compared to last year.

“They’re looking for the best value when it comes to buying presents for their loved ones, which is why sales events like Black Friday/Cyber Monday weekend are consistently growing in popularity,” said ARA CEO Paul Zahra.

“We are also seeing a continued trend towards spending on little luxuries whilst some broader discretionary categories are forecasted to be in decline," he added.

Zahra highlighted that food spending will dominate this peak season, with Australians expected to spend $19.04b (AUD$28b) on food, a 4.2% increase from last year. 

Discretionary (non-food) categories will see a modest increase of 1.6%. Spending projections include $3.87b (AUD$5.7b) on clothing (up 3.3%), $7.35b (AUD$10.8b) on other retailing (up 4.7%), and $7.21b (AUD$10.6b) on hospitality (up 4.7%). 

However, department store spending is expected to decline to $3.6b (down 1.5%), whilst household goods spending will total $10.7b (down 3.8%).

Amongst states, NSW is set to experience the largest growth, with a 3.4% increase in sales. Tasmania is forecasted to grow by 5.9%, Queensland by 3%, Victoria by 2.3%, and Western Australia by 0.2%. NSW shoppers are expected to spend $14.9 (AUD$21.9b), whilst those in Victoria will spend $12.08b (AUD$17.8b).

Zahra stated that the peak trading period is crucial for retailers, as many discretionary retailers earn up to two-thirds of their annual profit during this time.

“Whilst the year-on-year growth projections remain modest, these figures in most categories are encouraging after another challenging year,” he said. “We remain hopeful of an interest rate reduction when the RBA meets in November which would have a positive impact on consumer confidence”.