Despite economic talk turning towards recovery, IBISWorld predicts rising interest rates and the absence of cash hand-outs will see consumers saving more than spending this Christmas.
According to general manager IBISWorld (Australia), Robert Bryant, consumers may be more conservative in their spending with more rate rises to come and no more stimulus packages.
While IBISWorld expects total retail spending during the month of December to reach $20.5 billion, this shows softer growth of five per cent when compared to Christmas sales of the past two years.
“Christmas 2007 was perhaps the best performing period for retail spending over the last five years, with December of that year seeing an 8.2 per cent increase in total retail spending. In comparison, retail spending in December 2008 grew by only 5.7 per cent – kept buoyant largely by government stimulus packages,” said Bryant.
While spending at both mid- to high-end department stores and discount outlets is set to increase to $1.64 billion in the lead up to Christmas, Bryant said there will be a greater shift towards discount outlets as consumers remain nervous about overspending this festive season.
Stores such as Target, Big W and K-Mart are expected to make up close to 70 per cent of sales – ringing $1.14 billion through their registers, while mid to high end stores including David Jones and Myer will account for just over 30 per cent, and are expected to take $492.95 million over December.
Christmas 2009 will see clothing once again feature high on the shopping list, with shoppers forking out over $1.66 billion on buying items to give as gifts, and new outfits to wear to Christmas functions and on the big day itself. And while Aussies will shell out over $3.75 billion on household goods, Bryant said that this category will actually perform the worst this year, with total sales revenue increasing by only 1.4 per cent from 2008.
“In the past few years electronic gifts have been a growing gift category, and while 2009 will see them certainly remain a popular choice, presents are more likely to be in the realm of a new computer game or video game console than a plasma flat-screen TV or surround sound system,” he said.
With more people staying at home this Christmas, IBISWorld expects Australians will spend $8.33 billion on all food to be consumed at home, accounting for the largest share of retail spending (40.7 per cent) in the month of December – representing an increase of 8.4 per cent from the $7.68 billion spent in 2008.
Supermarket and grocery stores will take $6.87 billion of the Christmas spend, while a further $724.9 million will go on specialised food, and $733.2 million on liquor.
In the supermarket sector, Woolworths and Coles will account for 40 and 30 per cent of the spend respectively, IGA for seven per cent and Aldi only 1.5 per cent.
However, following a cash-strapped year, Bryant said the lead into Christmas will see heightened levels of competition between supermarkets, as consumers continue to seek best value for money.
“In 2009, our drive to get the best spread for our spend will see Aldi attract a larger portion of Christmas food sales than usual, with a growing number of households shifting their primary spending to Aldi, only looking to Woolworths and Coles to fill in the gaps,” he said. “This is in stark contrast to a few years ago, when Aldi was treated as an occasional shopping trip.”