Australians are poised to reduce their holiday spending by nearly 20% this year as the cost-of-living crisis continues to weigh heavily on household budgets. According to Deloitte’s Retail Holiday Report, the economic strain from inflation, rising interest rates, and sluggish economic growth is prompting consumers to tighten their purse strings.
The report, based on a survey of 1,000 consumers and retailer insights, indicates that Australians plan to spend an average of $1,002 during the holiday season, a significant drop of approximately 19% from the previous year. Shoppers are increasingly prioritizing value, with 95% of respondents seeking discounts and 32% willing to forgo purchases if they do not receive one. Despite these cutbacks, a notable 76% of Australians still intend to make a few indulgent purchases, reflecting a blend of frugality and splurging, according to Deloitte’s findings.
Retailers are facing heightened competition and are expected to enhance their discounting strategies, particularly during high-profile sales events such as Black Friday and Cyber Monday in November. These events are gaining importance as retailers adjust to the more cautious spending habits of consumers. Traditional holiday shopping periods in December, including Christmas and Boxing Day, remain crucial for overall sales.
Amidst these challenges, optimism is emerging within the retail sector. The report notes that only 51% of retailers anticipate sales growth, a decrease from previous years. However, there is a silver lining, with 41% of retailers expecting an improvement in consumer confidence over the next year—up from just 10% in 2023. This cautious optimism suggests potential for a rebound in the retail market in 2025.
Retailers are focusing on enhancing in-store experiences, leveraging digital innovation, and ensuring transparency in pricing to attract budget-conscious consumers. As the industry navigates through these turbulent times, there is hope for a recovery in consumer spending as economic conditions stabilize.
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