Domestic spending will be flat this Christmas as it’s expected to rise a minor 3.3 per cent from last year, according to IBISWorld.

The average shopper is expected to spend $1,213.22 over December to total $27.4 billion. But given the annual inflation of around 3.3 per cent, it means most retailers may miss out as consumers become savvier in where they spend.

IBISWorld general manager Karen Dobie said 2011 has been the year of smart shopping where customers are seeking the best value for money, the best range and the best service and this trend is anticipated to continue through Christmas.

Most growth will be in online spending, with clothing and footwear, electronics and books being the most popular purchases. Spending on toys, games and video games will also remain strong this Christmas, as frugal consumers opt to sacrifice buying gifts for older relatives, friends and colleagues rather than cut down on gifts for the kids.

“The current age compression phenomenon means that children are less interested in traditional toys from a younger age and more interested in electronic devices,” Dobie said.

“This has led to child-focused products such as LeapFrog and Vtech being popular picks at Christmas time, along with items typically targeting older consumers such as the iPod Touch, Nintendo 3DS, iPad 2 and e-readers.”

On the Christmas table, there is anticipated to be a shift towards seafood and leaner choices like poultry, as consumers become increasingly health conscious.
“Overall consumption of meat, fish and poultry will remain relatively stable this year,” Dobie said. “Fruits such as bananas and mangos will return to the table, with bumper crops flowing in from the Northern Territory and Queensland expected to drive down prices.”
Food retailers will see a timid 3.4 per cent spending increase this Christmas. However, after a lacklustre year caterers, venue hire operators and restaurants will be boosted by corporate Christmas spending.

Clothing and footwear will be the biggest losers this festive season, with an anticipated meagre 2 per cent rise. Men’s clothing retailers may be the only winners among clothing and footwear retailers, as style and image consciousness continue to be important for many men.

“Overall, we expect Australian businesses to spend $491 million on Christmas gifts and parties for staff and clients – up a healthy 9.2 per cent on last year but well below the $684 million splashed out in 2007.”