Aussie consumers have been cutting back on household spending to prepare for a spending splurge this holiday season, according to separate reports from Australia’s two primary retail bodies.
Consumers feeling the pressure of high and rising inflation and costs of living have already been preparing to take advantage of predicted bargain opportunities this holiday season, making adjustments to weekly spending habits as they look ahead at chances to save on gifts and discretionary items during retail’s biggest annual sales period.
A new Consumer Sentiment Report from the National Retail Association (NRA) finds that as many as 71 percent of consumers have changed their spending habits due to rising costs of living, with 20 percent of consumers preparing to spend more during 2022’s peak sales event season than in the previous year.
“This follows trends we have seen in previous years where interest rates and costs were rising,” says NRA Interim CEO Lindsay Carroll, “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.”
Those planning to shop more online direct via a retailer’s website during this period than in previous years grew at the highest rate when compared to all other avenues of planned shopping behaviour, at a rate of 11 percent expecting to increase spend via this method in 2022 followed by 10 percent expecting to spend more in store at shopping centres.
When eyeing off their online spend for the holiday season, the report also finds, opportunities to save on costs are firmly front of mind for consumers. 60 percent of consumers expect free shipping, with a further 51 percent expecting better offers and discounts when considering online spend compared to in store.
Overall, the pressures of high inflation and cost of living rates sees as many as 62 percent of consumers preparing to seek more sales and discounts over the next six months. This sits alongside 66 percent of consumers preparing to reduce spend on non-essential items and 60 percent planning reduced spend on dining and takeaway food spend over the same period.
“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, for great shopping experiences and for smooth transactions,” says Carroll, “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.”
Backing up this prediction are insights from the Australian Retail Association (ARA) in partnership with market research organisation Roy Morgan and customer relationship platform Salesforce, forecasting the rate of spend by Australians in the pre-Christmas period to be as high as $63.9 billion, a three percent increase from the results of 2021.
“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,” says ARA CEO Paul Zahra, “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.”
Whether predictions for sales results take into account changes due to inflation and the rise in product prices, however, appears unclear, but regardless signs look positive for retailers to see results during the holiday season no less positive than those seen in previous years.
The e-commerce landscape is changing. With a Power Retail Switched On membership, you get access to current e-commerce revenue and forecasting, traffic levels, average conversion rate, payment preferences and more!