Boxing Day bonanza with consumers ready to spend

Households have more cash and demand for home and food items is likely to be strong as the sales begin.

At the David Jones store in Melbourne’s Bourke Street mall, sales staff are rushing around serving customers and preparing for the weekend’s onslaught as big sales kick off. Photo: Luis Enrique Ascui

At the David Jones store in Melbourne’s Bourke Street mall, sales staff are rushing around serving customers and preparing for the weekend’s onslaught as big sales kick off.

A few months ago it was a different story. Melbourne was in lockdown, its population constrained by a suffocating combination of travel restrictions and curfews that turned the city’s famous shopping mall into a windswept, desolate landscape bereft of shoppers and city workers.

Now Melbourne, and the nation, is punching back and the tip of that spear is the consumer armed with record high levels of savings and the confidence to spend it.

Their only problem is to restrain their fears regarding COVID-19 and to navigate the social distancing restrictions that come with it.

“I think shoppers in general are shopping where they are comfortable, and whether that is in our stores or online we are really trying to give them the same experience,” David Jones retail operations manager Magda Combrinck told The Weekend Australian.

“For the customer who comes into our store we are trying to replicate that offer as much as possible online.

“I think our customers will go online anyway, they love that experience, and for the customer who wants to avoid the crowds this year we have done a lot of work on our online platform (to accommodate).”

Next door is rival Myer where it too is preparing for a very different kind of stocktake and Boxing Day sales this year in the age of COVID-19.

“The Myer Stocktake Sale is an Australian tradition and one of the best opportunities to save on thousands of products. This year will be no different with Myer offering incredible deals of up to 70 per cent off selected brands and products, with new daily deals dropping throughout the next few weeks,” said Myer chief customer officer Geoff Ikin.

“Millions of customers are expected to shop in-store and online over the sale period — we expect to sell more than 60,000 sheet sets, 60,000 pillows, and 200,000 bath towels — that is enough to fill the MCG oval 15.5 times or 528 Olympic-sized swimming pools.

“For those customers wishing to shop instore they can with confidence, with social-distancing protocols, enhanced hygiene procedures and sneeze guards in place, while those who want to shop from the comfort of their homes, our online store is available with free home delivery and click-and-collect options.”

Retail analysts believe Australian consumers are well placed to shop and are ready for the sales.

Citi analyst Craig Woolford believes a typical household will spend up to $3700 this December in retail (food and non-food). Over the past year, the average bank balance has lifted by $12,500 and credit card debt reduced by just over $500. This should give consumers the firepower to spend, he said.

“Australian households have built a substantial cash pool through 2020, which they can draw upon to boost spending this Christmas. The 12-month rolling household saving rate has lifted from around 4 per cent in December quarter 2019 to around 12 per cent in the September 2020 quarter.

“While the amount of government stimulus will be much lower in the December 2020 quarter, households are likely to save a smaller portion of their income given the already built-up bank balance.

“Australia is fortunate to be largely open this Christmas. After a very difficult year, we expect consumers will treat themselves, their family and friends. Conditions are ripe for a great Christmas for retailers.

“Households have more cash, demand for home and food items is likely to be strong and inventory positions are lean, leading to good gross margins.”