According to new research released today by the National Retail Association (NRA), 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% 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.

Boxing Day remains the most anticipated day in the retail calendar, but Black Friday and Cyber Monday pre-Christmas sales continue to grow in popularity.

NRA Interim CEO Lindsay Carroll said the data showed Australian consumers were prepared to cut back on their day-to-day spending in order to splurge on special events such as Christmas.

“This follows trends we have seen in previous years where interest rates and costs were rising,” Carroll said.

“People still want to feel special and have those great experiences. But rather than having regular dining experiences or spending that little extra on more expensive groceries or goods, they look for sales and special offers and they save their splurges for special occasions.”

QV Melbourne

Carroll said the data showed retailers needed to be right at the top of their game in terms of price competitiveness, customer service and ease of shopping.

“What this means for retailers is that there are still customers out there willing to spend money on the festive season, but more than ever they are looking for bargains, great shopping experiences and for smooth transactions.

“The challenge for business owners and their staff is greater than ever to have the right products, the best service and sharp pricing.

“Those who get these factors right can look forward to a very happy Christmas season.”

Key findings from the report found that:

• Aussies still prefer to do their festive shopping in-store, although online sales continue to grow in popularity
• Free delivery is the key factor in influencing online purchasing, followed by loyalty programs and free returns
• Four in five consumers said a retailer’s treatment of their staff was important to them
• A quarter of shoppers are prepared to pay more for sustainable products, however, Millennials and Zoomers simply expect brands to prioritise sustainability and ethics, and are less willing to pay.
• Bad customer service remains the number one obstacle to customer retention.

Pitt Street Mall, Sydney

Australian retail sales are set to remain strong over the festive trading period, according to insights released by the Australian Retailers Association (ARA) in collaboration with strategic partners Roy Morgan and Salesforce.

Australians are forecast to spend $63.9 billion in the pre-Christmas sales period (November 14 – December 24), which is up 3% on last year. Hospitality businesses are set to flourish in the run up to Christmas, with over $9 billion in trade – up 16.3% on 2021.

According to Salesforce’s Holiday Insights Hub, which tracks holiday shopping and commerce trends from November – December, 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

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

“Christmas is the most critical time of year on the retail calendar and given the financial pressure households are under at the moment, we know that 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% increase on last year,” 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.

Lakeside Joondalup, WA

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% points on last year’s record sales, show the strength of the Australian consumer is set to power through these challenges.

“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% on a year ago to expected total spending of more than $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,” Levine said.

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