Australian shoppers are expected to spend a record $23.5 billion during the Boxing Day sales period — an increase of 7.9 per cent on last year — according to data from the Australian Retailers Association and Roy Morgan.
But retail groups say that while sales will lift between December 26 and January 15, when the biggest discounts are around, spending will dramatically slow down after because of higher interest rates and the rising cost of living.
And Australian Retailers Association CEO Paul Zahra said sales were expected to slow further during the year.
He said businesses were having to cope with tighter margins as they battled "rising operating costs associated with fuel, energy, labour, supply chains and rent".
Hospitality venues are predicted to drive the greatest growth over the sales period, with the expenditure forecast to increase 30 per cent on last year, when many Australians were battling the COVID-19 Omicron wave.
Clothing is also predicted to see double-digit growth, with an expected lift of 11.4 per cent on last year, followed by department stores with growth of 8.9 per cent forecast year on year, mainly driven by deep discounts due to unseasonal weather.
"There are a range of factors influencing the results including inflationary pricing and unseasonal weather severely impacting the fashion industry," Mr Zahra said.
Boxing Day sales still outshine Black Friday, Cyber Monday
The National Retail Association has forecast shoppers will spend about $3 billion nationwide on Boxing Day alone.
Despite the growing popularity of Black Friday and Cyber Monday sales, Boxing Day remained the signature sales event for Australian consumers, the association's interim chief executive, Lindsay Carroll, said.
"According to our consumer sentiment report, 49 per cent of shoppers either intend to spend or may spend at the event, compared to 45 per cent for the Black Friday event," Ms Carroll said.
A temporary lift in spending will be welcomed by many small businesses, which are relying on the sales event to carry them through the start of 2023.
"Boxing Day is the last sales event on the retail calendar and consumers will be out seeking bargains, discounts and loyalty rewards in one last hurrah before inflation causes them to tighten their budgets," she said.
But she warned the retail sector was preparing for a slow spending period in the first half of next year.
The association is hoping purchases during the festive period will be enough to allow smaller retailers to trade as normal until inflation is brought back under control.
"Although spending has remained resilient throughout 2022, thanks to low unemployment and the pandemic savings buffer, escalating costs, power prices and interest rates will catch up with consumers in the new year," Ms Carrroll said.
She said consumers were researching their purchases online and then showing up to stores knowing what they wanted to buy and how much they were willing to pay.
CBA warns average amount spent could dip
Separate data from Commonwealth Bank shows 42 per cent of Australians plan to shop during the Boxing Day sales this year, up from 39 per cent who said they shopped last year.
The bank expects Australians expect to spend about $3.6 billion on December 26 alone.
But its research, based on a survey of more than 1,000 Australian consumers, suggests Australians are planning to spend less than they did last year, with the average planned spend this year at $483.20, down from $501.60 in 2021.
Its survey found cost of living pressures would impact people's spending decisions, with 78 per cent planning to purchase essentials when they were on sale and many having to dip into their savings to do it.
Clothes and shoes (47 per cent), technology and electronics (38 per cent) and appliances (36 per cent) are tipped to be the most sought-after items during the Boxing Day sales, with Australians expected to splurge about $3.6 billion, CBA said.
When it comes to shopping online vs in store, about seven in 10 (68 per cent) intend to shop online or via their mobile.
Separate data from Salesforce suggests retailers can expect to see a 15 per cent increase in digital traffic on Boxing Day compared to Black Friday.
Twenty-three per cent of total sales from the extended holiday shopping season (November 1 to January 15) are forecast to take place online post-Christmas.
"As interest rates continue to climb, shoppers will be focused on seeking out the best deals post-Christmas," Jo Gaines, vice-president of retail and consumer goods at Salesforce, said.
