Retailers predict a $58 billion Christmas boom as the east coast of Australia opens up

Retailers predict a $58 billion Christmas boom as the east coast of Australia opens up
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  • The Australian Retail Association has forecast another mammoth year of spending as the country again emerges out of lockdowns in time for Christmas.
  • Its report anticipates spending will be up 11.3% on pre-pandemic levels. 
  • However experts and retailers have warned that ongoing supply chain chaos may impact consumer spending, with risks of product shortages and jumps in prices as shipping delays persist. 
  • Visit Business Insider Australia’s homepage for more stories.

Australians are set to spend big following the end of lengthy lockdowns in Sydney and Melbourne, with up to $58 billion predicted in Christmas sales. 

A new report out from the Australian Retail Association (ARA) and research firm Roy Morgan suggests spending will be in-line with last year, but still up 11.3% on pre-pandemic levels. 

However experts and retailers have warned that ongoing supply chain chaos may impact consumer spending, with risks of product shortages and jumps in prices as shipping delays persist. 

The report forecasts this year’s pre-Christmas spending will be significantly up on 2019’s figures but in-line with last year’s surge when many major cities were released from extended lockdowns in time for Christmas. 

It suggests overall spending will come in at $58.8 billion, with sales of clothing, footwear and accessories expected to surge as much of the east coast is released from stay-at-home orders. 

ARA chief executive Paul Zahra said last year’s explosive spending marked unseen highs for the retail sector. 

“To achieve last year’s number is a pretty impressive feat because it was up 11.3% and I can’t remember ever in my career — and I have been in the industry more than 40 years — double digit growth in that quarter, so actually to maintain that level is outstanding,” he said. 

Zahra said most of the growth this year was spurred by spending on clothing, fashion, restaurants and hospitality as consumers jumped at the opportunity to return to the normality of pre-pandemic life. 

“I think there’s no doubt there will be a focus on experience because we have not been able to connect, so people will be out and about and we are obviously seeing that in restaurant and cafe numbers,” he said. 

Tasmania is forecast to have the strongest growth in sales towards Christmas followed by Western Australia and Tasmania, according to the report. 

Zahra said the forecast was “great news” for the small businesses and retailers that suffered through some of the longest lockdowns in the world this year. 

“The Christmas trading period is critical as it’s the time when most discretionary retailers make up to two thirds of their profits for the year.”

Zahra said since the reopening of NSW non-essential retail and the state emerging from lockdown the sector had witnessed a strong rebound in sales momentum.

Michele Levine, chief executive of Roy Morgan, said its sales forecasting signalled a “consumer economy exhibiting all the signs of pent-up demand,” adding that online sales would also continue to grow.

“The COVID 5-year digital acceleration means many more Australians are shopping online, so this Christmas we will see much more of a mix between in-store and online shopping,” Levine said.

But as global supply chains continue to groan, some Australian retailers have warned of possible stock shortages that could impact sales as the end of the year rolls around. 

Amid a perfect storm of global lockdowns and labour shortages, The World Bank estimates 8.5% of global container shipping is stalled in or around ports, twice as much as in January.

Along with delays caused by COVID-19 outbreaks that have forced Australian ports to shut down and held up shipments in China, increased freight costs have led some importers to stop shipping to Australia. Adding to this are labour disputes that have led to truck driver shortages for major delivery companies. 

As a result retailers including The Reject Shop and Australian supermarkets have warned of spikes in prices and stock shortfall that will impact the holiday period and could persist into 2022.