Retailers anticipate soft Christmas sales

Roy Morgan’s annual Christmas retail sales forecasts, conducted in conjunction with the Australian Retailers Association, suggest Australians will spend over $52.7 billion across retail stores during the Christmas trading period, an increase of 2.6% from the $51.4 billion of retail expenditure during the 2018 Christmas trading period:

Growth in retail expenditure is predicted across all six categories measured with spending on Food expected to grow by 3.2% from a year ago to nearly $21.7 billion. Also set to grow strongly will be Apparel including clothing, footwear and accessories up 3% to almost $4.2 billion.

Hospitality businesses are forecast to grow by 2.3% to an expenditure of well over $7.4 billion and an impressive $8.8 billion is expected to be spent on Household Goods this Christmas, an increase of 0.6% from a year ago. Department stores are set to experience slower growth than other categories, up by 0.5%, to overall spending of almost $3 billion.

The category combining ‘Other retailing’ which includes online retailing is predicted to experience the fastest growth of all, up by 3.7% to spending of over $7.6 billion.

Retail sales forecast to grow most strongly in Queensland, Victoria and Tasmania

Analysis of Roy Morgan’s pre-Christmas retail forecasts by State and Territory shows growth is expected across the nation led by Queensland, up by 3.6% to over $10.6 billion.

Christmas retail spending is also forecast to grow strongly in Victoria, up by 3% to over $13.8 billion and Tasmania up by 2.3% to $1.06 billion. Australia’s largest State of New South Wales is forecast to have Christmas retail spending of nearly $16.8 billion, an increase of 2% with a similar level of growth expected in South Australia, up 2.1% to $3.4 billion.

Forecast Christmas retail spending in Western Australia is predicted to increase by 1.7% to over $5.5 billion while there are also increases predicted for both the ACT and NT.

While the 2.6% increase in retail sales growth sounds okay, it is actually very weak given population growth is running at 1.6% and inflation is running at 1.7 (i.e. 3.3% combined)%.

These forecasts also appear bullish given retail volumes registered their first annual decline in the September quarter:

It’s shaping up as a bad Christmas for retail.

Leith van Onselen

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