Retailers looking to 2025 as Christmas spending falls

Shoppers are expected to spend nearly 20 per cent less over the Christmas holiday season, and a Deloitte report says even Black Friday and Cyber Monday turnover is likely to be down.

Cheaper goods are likely to fill Santa’s sack this festive season, with a new report showing the fall in consumer confidence will last through to the new year.

Deloitte’s thirteenth Retail Holiday Report, released on Tuesday, says shoppers are looking to spend almost 18.9 per cent less – an average of $1002 each – these holidays during a crucial period for retailers.

Average expenditure during the 2023 holidays was $1192 per shopper.

The fall comes as a direct result of the Reserve Bank’s continued fight against sticky inflation.

The central bank has lifted interest rates 13 times since May 2022, fuelling a cost-of-living ­crisis and eroding consumer confidence.

Reserve Bank governor Michele Bullock has recently hinted that cash-strapped Aussies won’t see a change in the cash rate soon, despite central banks across the world beginning to ease off record rates and a widely expected cut by the US Federal Reserve this week.

RBA governor Michele Bullock. Picture: Max Mason-Hubers

Deloitte retail, wholesale and distribution partner Damien Cork said consumers would actively seek the best deals ­available.

“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,” he said.

“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.

“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 … the traditional season from early December up to Christmas and Boxing Day … will remain the dominant sales period.”

The report says 51 per cent of retailers expect sales growth during the 2024 holiday season, down from 57 per cent a year ago and 67 per cent in 2022.

Only 40 per cent of retailers believe consumers will pay full price for their goods and services.

A major factor is the lack of trust consumers have in retailers, according to the report, with 84 per cent of those surveyed labelling trust as important or critical to purchasing decisions.

Of shoppers surveyed, 52 per cent says product quality is the top factor for building trust (as opposed to 69 per cent of retailers), while 19 per cent say fair pricing is the most important (8 per cent of retailers).

There is some reason to be optimistic for 2025, however, with 56 per cent of retailers expecting growth in sales over the next year – including 4 per cent expecting growth in the double digit range – with rate cuts expected as well as more money in people’s pockets following the Stage 3 tax cuts.