Australians are feeling the squeeze this holiday season, with new research from ShipStation revealing more than two in five (42 per cent) have decreased their 2024 holiday spending budget due to inflation, high interest rates, and overall cost-of-living pressures.
Compared to last year’s average spend of $1,000 to $2,000, most now expect to keep their non-essential holiday shopping budget between $200 and $500 — a steep 75 per cent reduction.
The pinch many Australians are feeling reflects the Reserve Bank of Australia’s recent decision to maintain high cash rates with no cuts in sight.
“Australians are tightening their belts and becoming more selective with their purchases. We’re already seeing the impact on holiday spending. Average order values have dropped by 4.5 per cent compared to this time last year, with a 9 per cent reduction year-to-date, indicating that many consumers are holding out for peak season promotions to maximise every dollar,” said David Boyer, ShipStation’s VP and head of ANZ.
Generational divide in spending habits
While Australians are generally spending less, Millennials are set to outspend other groups this peak season based on their estimations. Among Millennials, the top expected spending bracket for non-essential items is $1,000 to $2,000, with 22 per cent planning to spend within this range. Gen Z follow with $750 to $1,000 being the most popular bracket (19 per cent). On the other hand, Boomers are scaling back, with one quarter (25 per cent) expecting to spend between $250 and $500.
37 per cent of Gen Z and 36 per cent of Millennials say they have had to increase their holiday spending budgets because of economic factors this year, compared to just one-quarter (24 per cent) of Boomers, further highlighting the generational divide and their differing priorities.
Discounts, promotions, and value to drive holiday shopping
Australians are prioritising discounts and value this holiday season with 62 per cent saying sales, discounts, and promotions are the largest factors influencing their participation in peak season shopping. With affordability top of mind, seven in ten (69 per cent) say they plan to buy cheaper alternatives this year. In fact, one in two (50 per cent) will avoid luxury purchases altogether.
Thrifting will be widespread with 30 per cent expecting to shop secondhand on platforms like eBay and Depop as the cost of living crisis continues to bite. Smaller and independent brands are also gaining traction, with one in three (32 per cent) Australians favouring them over larger retailers.
Two in five (19 per cent) are planning to shop via social media platforms — a trend led by Gen Z, with 37 per cent intending to make purchases through social channels.
Shipping and return costs are make-or-break for Aussie shoppers
With rising carrier costs and margins being squeezed, many retailers are feeling pressured to pass costs on to consumers. However, 73 per cent of consumers expect to pay under $10 on shipping for their purchases and over half (51 per cent) want free shipping on returns for change-of-mind purchases. In fact, 44 per cent are prepared to not shop with retailers who don’t offer free returns.
“Our findings have captured a shift in how Aussies are approaching holiday shopping this year. Savvy retailers who use multiple carriers can compare shipping rates and use their bargaining power to drive down shipping costs, making them more attractive to customers. Retailers who understand their customers and prioritise affordable shipping, flexible return policies, and targeted promotions, will not only capture peak season sales but build lasting loyalty,” said Boyer.
The research was conducted by ShipStation via research platform Attest. ShipStation surveyed 1,000 Australian consumers in October 2024 to understand their shopping habits and preferences.
