Roy Morgan’s annual Christmas retail sales forecasts conducted in conjunction with the Australian Retailers Association (ARA) indicate Australians will spend over $54.3 billion across retail stores during the Christmas trading period.
Forecast retail spending this Christmas of over $54.3 billion is an increase of 2.8 per cent from the $52.9 billion of retail expenditure during the 2019 Christmas trading period and is a better than expected forecast than many would have thought possible during the year as Australia dealt with the unprecedented pandemic.
Because of the huge impact on spending patterns caused by COVID-19, and the associated lockdowns around Australia, spending across the six categories measured has diverged significantly during 2020.
The clearest example to highlight is the plunge in spending on Hospitality businesses as forced lockdowns closed restaurants, hotels, pubs and cafes for extended periods and the concomitant surge in spending on Food bought at supermarkets and other fresh food retailers that remained open.
The impact of COVID-19 measures on Hospitality businesses continues with social distancing measures in place and restrictions on the number of customers allowed in many States.
Unsurprisingly, the largest percentage increasing in spending is predicted for the Food category with pre-Christmas spending forecast to grow by a large 10 per cent from a year ago to over $23.8 billion. Due to the impact of COVID-19 and the continuing restrictions, Hospitality spending is forecast to be 18.7 per cent down on a year ago at just under $6.1 billion.
Analysing the two categories of Food & Hospitality together shows a combined growth rate of 2.6 per cent from a year ago to total spending of over $29.9 billion – in line with overall retail growth predictions.
Growth in Household goods is expected to grow strongly on a year ago to be up by 9.6 per cent to over $9.7 billion but spending on Clothing, Footwear and Accessories is set to be down 12.2 per cent to $3.7 billion.
Department stores are set to experience a slight decline on a year ago, down by two per cent, to overall spending of almost $3 billion. The category combining ‘Other retailing’ which includes online retailing is predicted to experience significant growth of 6.6 per cent on a year ago to spending of over $8 billion.
Roy Morgan CEO Michelle Levine commented: “When Australia locked down in March to deal with the rapidly spreading COVID-19 many expected 2020 would be a disastrous year for retailers. However, unprecedented Government action to stimulate the economy has supported many retailers throughout a tough year which is expected to see continued retail growth into year-end with Christmas spending forecast to grow 2.8% on a year ago to over $54.3 billion.
“The banning of international travel has forced Australians to spend their JobKeeper, expanded JobSeeker, superannuation withdrawals of up to $20,000 closer to home and retail sales have boomed in States such as Queensland and WA which have successfully dealt with COVID-19 although conditions have been tougher in the larger States of NSW and Victoria.
“Of course, in a year of surprises, there is a larger degree of uncertainty than normal when making forecasts about spending patterns for the weeks and months ahead. Just this week we see a renewed outbreak of COVID-19 in SA which has already caused WA Premier Mark McGowan to re-impose a mandatory two-week quarantine on all visitors from Adelaide only 1 day after relaxing the entry conditions after more than six months.
“These uncertainties mean there is a chance any forecast could be made to ‘look stupid’ if prevailing conditions change significantly and borders which are in the process of re-opening are forced to slam shut again over the next few days or weeks,” Levine said.
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