Pre-Christmas spending tipped to rise to $42.1 billion, but it’s not the whole picture

Pre-Christmas retail spending in Australia is predicted to reach $42.1 billion this year, up 3.3% on the 2012 figure of $40.7 billion, according to new research.

The figures from the Australian Retailers Association and Roy Morgan Research cover the period from November 14 until Christmas Day, December 25.

ARA executive director Russell Zimmerman said he expected the bulk of the sales to occur in the week leading up to Christmas Day as shoppers make last-minute purchases.

“The ARA is pushing for an interest rate cut in December as retailers are counting on the lead up to Christmas as an opportunity to catch up on past slower retail sales and get back on track financially,” he said.

In good news for embattled fashion retailers, sales for apparel are predicted to rise 6.2% to $3.225 billion. Festive eating and drinking will see food sales up 3.2% to $17.334 billion, and household goods up 2.8% to $7.017 billion.

“With 6.2% predicted growth, apparel sales indicate an increase in consumer confidence for the Christmas period,” Zimmerman said.

“Much like 2012, food and hospitality are expected to account for a significant percent of the overall projected figure, while other categories such as department stores and clothing, footwear and personal accessories may rely on last minute Christmas sales and promotions for any significant growth in sales.”

State by state, the Northern Territory is expected to have growth of 5.2%, South Australia is tipped to have a sales rise of 4%, NSW 3.9%, Queensland 3.7% and Victoria 3.4%.

RetailOasis director Stephen Kulmar told SmartCompany he agreed that the rise of 3.3% was likely, but says the picture was “not as black and white”.

He says focusing on the pre-Christmas period doesn’t show the true value of Christmas spending on the economy.

Kulmar says that the trend towards buying gift cards in recent years has seen pre-Christmas spending appear to grow at a lower rate, but post-Christmas sales spending boost.

This is due to the fact that a gift card sale is not counted towards sales figures when purchased, but rather when the recipient uses it, and the trend is to use the cards post-Christmas when shoppers can get more goods for the dollar value of the card.

Kulmar also points to the “substantial and continual explosion of e-commerce” both domestically and internationally, and predicts a huge boom in international online spending on “Cyber Monday”.

Cyber Monday is held on December 2 in the US, the day after Thanksgiving, and is traditionally a day where retailers put significant sales reductions on their products.

Kulmar says on this day e-commerce sales in the US can reach around $40 billion, around the same amount as Australia’s pre-Christmas spend prediction.

As a flow-on effect of Cyber Monday, he thinks that Australia could have a solid e-commerce spending boost on the same day.