Aussies scrapping luxury goods and turning to bargains for Christmas as inflation rises

Cost of living pain and rising inflation has changed how many Aussies will do their Christmas shopping - but the biggest difference isn’t what you’d think.

Australians are cutting back on luxury items and looking for bargains as they battle rising inflation, but many are still planning to spend big for Christmas, according to new data.

Almost half of shoppers surveyed are feeling confident about pre-Christmas sales, with one in five planning to outspend last year, according to the National Retail Association research.

The consumer sentiment report, which was prepared with the Retail Doctor Group, found 71 per cent of consumers had changed their spending behaviour due to inflation.

Purchasing decisions during big events – which is still led by Boxing Day but also includes Black Friday and Cyber Monday pre-Christmas sales – are expected to be driven by discounts and offers available.

The biggest shopping events in Australia. Picture: NRA

According to the report, almost half of those surveyed had switched to cheaper brands as they battled rising inflation.

“Consumers are feeling the impacts of continued interest rate rises and are acutely aware of the impact of these inflationary pressures on their hip pocket,” the report read.

“This is driving a significant shift in consumer spending habits, with consumers reporting that they switched brands more in 2022 than at any time since the pandemic began.”

The report also found that over the next six months 66 per cent of people would reduce their spending on non-essentials, 62 per cent would seek more sales and discounts, and 60 per cent would reduce visits to restaurants and takeaway.

Only 2 per cent said they would make little or no change to their spending habits.

NRA interim chief executive Lindsay Carroll said overall the data showed Australians were prepared to cut back on their day-to-day spending to splurge on special events such as Christmas.

“This follows trends we have seen in previous years where interest rates and costs were rising,” Ms Carroll said.

The report found that over the next six months 62 per cent of people would seek more sales and discounts. Picture: NCA NewsWire/Luis Enrique Ascui

“People still want to feel special and have those great experiences.

“But rather than having regular dining experiences or spending that little extra on more expensive groceries or goods, they look for sales and special offers and they save their splurges for special occasions.”

The report also found people still preferred to do their festive shopping in-store, although online sales were growing, while free delivery was a key factor followed by loyalty programs and free returns.

Bad customer service remained the biggest obstacle to customer retention, the report noted.

“There are still customers out there willing to spend money on the festive season, but more than ever they are looking for bargains, for great shopping experiences and for smooth transactions,” Ms Carroll said.

“The challenge for business owners and their staff is greater than ever to have the right products, the best service and sharp pricing.

“Those who get these factors right can look forward to a very happy Christmas season.”