17 September 2024: Australians battling an ongoing cost-of-living crisis are planning to slash their spending by almost 20% this holiday season, prompting retailers to find ways to offer more value as they look towards a more positive 2025.
According to the 13th edition of Deloitte’s annual Retail Holiday Report, pre-Christmas competition for consumer wallets is already heating up, with businesses strongly focused on a time of year that can be make or break for so many.
The report assesses retailer sentiment towards the all-important holiday trading period, identifies key sector trends into 2025 – and, for the first time, has surveyed 1,000 consumers on their spending intentions and shopping expectations.
Key retailer findings:
Key consumer findings:
Deloitte Consumer Products & Retail Sector Leader Elise Sharpley said: “The last 12 months have brought little joy for our retailers, as inflation, interest rate rises and weak demand have weighed on economic growth.
“Cost of living pressures and the associated belt tightening are driving consumer spending intentions and actions, and this is set to continue into the 2024 holiday retail season.
“On the back of real retail turnover per capita not growing since mid-2022, consumers are planning to spend $1,002 on average this year, down 18.9% from 2023. Retailers will be working hard to entice these consumers to open their wallets as the silly season heats up.
“Against this backdrop, consumers are changing the way they shop, how much they purchase and the type of products they buy, so we’re looking at a more frugal holiday period ahead.”
Deloitte Retail, Wholesale and Distribution partner, Damien Cork, added: “As they usually do, many consumers are still looking to splurge here and there, but they’re also telling us they expect to buy fewer products and services.
“When they spend, nearly everyone will be seeking the best deals. As a result, discounting wars will intensify as retailers understand consumers won’t pay full price, and many consumers tell us they will walk away if a discount isn’t on offer. Retailers are adapting by lowering prices, as well as focusing on affordable and value-driven products, creating better in-store experiences, and embracing innovation to attract new customers.
"Both retailers and consumers expect plenty of activity during the November flash sales events of Click Frenzy, Black Friday and Cyber Monday, a sign of the growing influence of US trends on Australian sales campaigns. But retailers should keep some powder dry for the traditional season from early December up to Christmas and Boxing Day, which will remain the dominant sales period.
“With 32% of consumers prioritising value for money when they buy, and 19% favouring promotions, these flash sales events are clearly significant.
"The report also finds that consumers are continuing to flock to in-store experiences. While social and search constitute the first step of 58% of customer journeys, sales transactions through online channels are likely to decline these holidays. To make the most of this dynamic, retailers must firmly on integrating digital and in-store experiences so their customers can shop when, where and how they please.
“Close to 90% of consumers also consider trust a key factor in their purchasing decisions, so making fair and transparent pricing and delivering great service are important considerations for retailers.”
And what might 2025 have in store?
“Post Christmas and new year 2025, the road ahead for Australia's retail industry may be challenging, and household budgets will remain stretched for now,“ Ms Sharpley said.
“But with more than 40% of retailers anticipating an improvement in consumer confidence over the next 12 months, there is a strong case to make that brighter days lie ahead.
“More than half of retailers expect growth in sales over the next 12 months, and some even anticipate a double-digit rise. The share of retailers anticipating a decline in consumer confidence has also plummeted – from 61% to 26% - indicating we may currently be at the bottom of the business cycle.
“Businesses should focus on what they do best in providing exceptional customer experiences, great after-sale service, and integrated digital and physical offerings to entice consumers to start spending again.”
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