Retailers are expecting Boxing Day shoppers to spend $1.25bn on Tuesday as the sector hopes for relief from a drop in discretionary spending.
Retail sales have been sluggish throughout 2023 as cost-of-living pressures bite.
The latest Australian Bureau of Statistics figures show retail turnover was down and discretionary spending was slower than usual, something the ABS said had become a pattern as consumers wait for Black Friday and Boxing Day sales.
The Australian Retail Association is hopeful that, despite the cost-of-living crisis, consumers have been delaying their purchases until Boxing Day.
They have forecast about $1.25bn in spending on Boxing Day itself and $23.9bn for the entire sales period, which lasts until 15 January. That is an increase of 1.6% on last year.
They described the “modest increase” as positive, given the general slowdown in discretionary spending.
“There’s no doubt Aussies love a bargain and, despite cost-of-living pressures and economic turbulence, Australians are still set to spend slightly more than last year in the final pitstop before 2024,” the association’s chief executive, Paul Zahra, said.
Zahra said the importance of the sales for retailers “could not be understated as retailers look to build momentum heading into the new year”.
The Commonwealth Bank is estimating about half of Australians will take part in the sales. They estimate a spend of $4.6bn in total, though individual spending is likely to be lower than usual.
The bank estimates the average planned spend this year is $475.70 compared with a planned average spend of $483.20 in 2022 and $557.05 in 2021.
“Aussie household budgets are being squeezed on multiple fronts, so it is not surprising that individual shoppers are tightening their belts,” the bank’s personal finance expert Jess Irvine said.
The National Retail Association, a separate peak body, said the year had been tough for retailers due to inflation. NRA director Rob Godwin said retailers had carried a lot of stock throughout the year and were likely to offer greater discounts over the Boxing Day sales.
“Retailers are carrying a lot of stock this Christmas and new year and they have stepped up the discounting to try and turn that into cash for the first quarter of 2024, so what you will see is an extended period of sales starting today, on Boxing Day, and running all the way through into the New Year period,” he told the ABC.
The nation’s major airlines have also cut prices for the Boxing Day sales, with Qantas, Jetstar and Virgin Australia selling discounted fares.
Some retail experts are predicting that Black Friday and Cyberweek will become the more dominant holiday sales period, overtaking Boxing Day.
An estimated $6.3bn was spent across the four-day sale this year, growing by about 3% year-on-year.
“Traditionally, you’ve always had Boxing Day being the focal point,” Davies said. “Now that is [Cyberweek] and the whole month of November is the discounting period.
“What is happening now, though, is to try to entice consumers back into the stores and stretch the dollar further is why we’re seeing a lot of sales happening a lot earlier.
“The online stores [are] starting Boxing Day sales from Wednesday, when the cut-off for shipping finished and you will see that carry across now throughout the retail landscape.”
