With discretionary spending under pressure for millions of consumers in the country amid a cost of living crisis, a new report indicates the fall in consumer confidence will last into the holiday season this year.
Deloitte’s 13th Retail Holiday Report, released on Tuesday, says shoppers are looking to spend almost 18.9 per cent less – an average of $1002 each – these holidays which is a crucial period for retailers. The average expenditure during the 2023 holidays was $1192 per shopper.
“Both retailers and consumers expect plenty of activity during the November flash sales events of Click Frenzy, Black Friday and Cyber Monday, a sign of the growing influence of US trends on Australian sales campaigns,” said Deloitte retail, wholesale and distribution partner Damien Cork, according to The Australian.
“But the traditional season from early December up to Christmas and Boxing Day will remain the dominant sales period.”
The report finds 51 per cent of retailers expect sales growth during the 2024 holiday season, down from 57 per cent a year ago and 67 per cent in 2022.
Only 40 per cent of retailers believe consumers will pay full price for their goods and services.
The conservative outlook among Australian retailers is evident as the Australian Bureau of Statistics reported retail trade for July 2024 was unchanged from June. Analysts had expected a 0.3 per cent rise after growth of 0.5 per cent in both June and May.
National Retail Association interim chief executive Lindsay Carroll already said that those latest trade figures were worrisome, given Australia’s strong population growth, and may not recover in time for the busiest retail season of the year.
She pointed out that customers were searching for discounts, which was in turn hurting some retailers. “Most smaller retailers cannot afford to rely on heavy discounting strategies to get by, and it is inevitably these businesses that exit the market,” said Carroll.
Cork added that many consumers are still looking to splurge occasionally, but they’re also expecting to buy fewer products and services. “When they spend, nearly everyone will be seeking the best deals. As a result, discounting wars will intensify as retailers understand consumers won’t pay full price, and many consumers tell us they will walk away if a discount isn’t on offer,” said Cork.
However, the Deloitte report did strike an optimistic note for next year, with 56 per cent of retailers expecting growth in sales over the next year – including 4 per cent expecting growth in the double-digit range.
While the RBA has refused to bring in rate cuts thus far this year, and it is unlikely to do so for the remainder of the year. However, consumers are more optimistic that the cuts will come into effect next year as inflation begins to cool leaving them with a greater discretionary spending component.
