Australians are expected to spend a record $1.3 billion in the Boxing Day sales this year, according to a forecast by the Australian Retailers Association (ARA) and Roy Morgan.
The longer post-Christmas retail period, from December 26 to January 15, is predicted to generate A$24.7 billion, up 2.6% from last year.
ARA's chief industry affairs officer Fleur Brown highlighted population growth and rising prices as key factors behind the spending surge.
“Australia has seen some pretty strong growth in population, and that's swelling the figures,” Brown said. She noted that inflation and supply chain costs had contributed to price increases.
Despite the spending growth, the broader economic outlook remains subdued. Australia's September quarter GDP recorded an annual growth rate of just 0.8%, one of the weakest in decades outside the pandemic.
Shifting shopping patterns
Retailers have faced challenges as consumers increasingly shift their holiday shopping to November during Black Friday and Cyber Monday sales.
ANZ senior economist Adelaide Timbrell pointed out that the share of fourth-quarter retail sales in December had declined over the years, with November capturing a larger portion of spending.
ABS data supports this trend, with retail sales rising 0.6% in October and 3.4% year-on-year, spurred by early discounting.
Challenges and bright spots
The retail sector has grappled with subdued discretionary spending, rising operating costs as well as retail crime. Smaller businesses have been particularly vulnerable, with closures reported across the country.
Despite these challenges, some retailers have excelled. Wesfarmers Ltd (ASX:WES), owner of Kmart and Bunnings Warehouse, posted record sales, driven by strong performance in essentials and low-cost offerings. JB Hi-Fi Ltd (ASX:JBH) also exceeded expectations, benefiting from a low-cost model.
Looking ahead, market analysts are optimistic about potential interest rate cuts in 2025, which could rejuvenate discretionary retail spending.
Stella Ong from Superhero expects rate cuts to boost consumer confidence, particularly in fashion, luxury and entertainment sectors.
“Although cautious optimism remains prudent, this breath of fresh air could reignite consumer confidence,” Ong said.