Boxing Day Retail Forecast: A Promising Upsurge Amid Challenges
Australians are poised to make a remarkable splash on Boxing Day this year, with projected spending reaching an astounding $1.3 billion. This forecasted figure demonstrates a burgeoning enthusiasm for holiday shopping, buoyed by several factors including an uptick in consumer numbers due to robust migration trends as well as the pervasive impact of inflation on retail prices.
The Australian Retailers Association, in collaboration with Roy Morgan, has predicted a 1.8 percent increase in sales during this Boxing Day compared to last year. This upward trend isn’t expected to fold post-holiday; from December 26 through to January 15, 2025, Australians are projected to spend a total of $24.7 billion, marking a 2.6 percent growth from the previous year’s holiday shopping season. As Fleur Brown, the chief industry affairs officer of the Australian Retailers Association, emphasized, this signals a “healthy appetite” for Boxing Day sales among Australians, even within a climate of economic uncertainty.
Brown acknowledged a slight cooling in growth compared to the pre-Christmas peak shopping season, yet reaffirmed that maintaining any level of growth in today’s challenging economic landscape remains commendable. Both the increased number of shoppers and escalating prices fueled the projected numbers. Brown pointed to Australia’s significant population growth as a foundational driver behind the elevated figures, attributing it in part to inflating prices visible across the board, driven by the rising costs of goods due to supply chain pressures. She also notably highlighted that while retail spending is growing, it should be viewed with caution as it may not keep pace with inflation.
In the September quarter of this year, reports indicated that Australia registered its weakest annual growth rate outside of the pandemic era, at just 0.3 percent for the quarter and 0.8 percent year-on-year. This underlines the retail industry’s struggles in a broader context of economic pressure.
The challenges facing the retail sector are noteworthy. Brown articulated that conditions have turned “deeply tough” for retailers, with modest growth seen year-on-year across various sectors. Small businesses have particularly felt the crunch, leading to an uptick in closures. Heightened rates of retail crime have further exacerbated issues, impacting businesses’ profitability and overall morale.
Interestingly, changing consumer behaviors are also influencing retail dynamics. Many consumers appear to be shifting their shopping patterns, with some opting to complete their Christmas shopping earlier in the season. The rise of Black Friday and Cyber Monday promotions has substantially pulled forward consumer spending, reflecting a transformation in retail habits. ANZ senior economist Adelaide Timbrell indicated that the share of retail sales recorded in November has seen an increase, while December’s share has proportionally decreased, indicating an ongoing trend that could reshape future shopping months.
As the outlook for consumer spending remains uncertain against a backdrop of current high-interest rates, the sector’s sustained resilience may hinge on forthcoming economic developments. Australia’s cash rate, presently at 4.35 percent, along with an elevated core inflation rate of 3.5 percent, has led to diminished discretionary spending from consumers. Major retailers such as Mosaic Brands and Dion Lee have succumbed to these economic pressures, leading to closures.
Conversely, there is a glimmer of hope for the industry. Analysts like Stella Ong from share trading platform Superhero are optimistic that certain retailers, particularly those dealing with essential or low-cost items, may capitalize on upcoming opportunities. For instance, Wesfarmers saw record sales, highlighting the potential for success among companies focusing on essential goods during these times. Moreover, anticipated interest rate cuts in 2025 could rejuvenate consumer confidence, enabling a resurgence in discretionary spending which has considerably lagged in recent months.
Retailers might jumpstart their fortunes if expected cuts materialize, inspiring consumers to indulge in fashion, dining, and entertainment again. As lending becomes more accessible and consumer sentiment improves, the retail sector could see a revitalizing impact from these anticipated economic shifts.
In summary, while the Boxing Day forecasts are optimistic, the retail landscape is fraught with challenges stemming from inflation, changing shopping habits, and broader economic deterioration. However, the potential for growth remains, underscoring the sector’s resilience and adaptability in the face of adversity.
