Slow start then Boxing Day bargain hunters swoop

Despite a slow start, retailers predict shoppers will have spent more than $2.5bn on Boxing Day.

Carolina Tanaka, 30, and Shervin Mazaheri, 33, take advantage of the sales on Boxing Day in Melbourne. Picture: Stuart McEvoy

Retailers endured a slow start to Boxing Day sales, but Australians appeared to take to the shops in increasing numbers through the day, lifting hopes that households’ spending strike of 2019 may ease and provide the economy with a much-needed lift next year.

The Australian Retailers Association predicts consumers will spend more than $2.5bn on Boxing Day, an increase of 2.9 per cent from a year earlier. Overall, the ARA forecasts $18.7bn will pass through the tills between Christmas and mid-January, an increase of 2.3 per cent from 2018.

The ARA’s forecast for the pre-Christmas period was for 2.6 per cent growth in sales from the previous year — the weakest pace in 11 years of forecasts.

Early footage showed an underwhelming number of shoppers pouring into department stores on Thursday morning.

Despite concerns the increasingly popular Black Friday and Cyber Monday sales promotions last month would rob Boxing Day of its firepower, ARA executive director Russell Zimmerman said that as the day went on, he became more confident that shoppers were still spending up.

“If you would have asked me that question at 10am, I would have said absolutely and utterly yes, (but) by around 11am I was more convinced it was back on track as normal for a Boxing Day sale. By 1pm or 2pm, I was in (Sydney’s) Pitt Street Mall and I reckon it was as busy as, if not busier than, last year, it was absolutely pumping,” he said.

“Pitt Street Mall was a sea of people everywhere. I’m pretty pumped at the moment.”

He said the bushfires might have suppressed retail sales, especially in parts of Sydney.

Bargain hunters armed with credit cards and gift vouchers flooded Melbourne’s Bourke Street. Couple Carolina Tanaka, 30, and Shervin Mazaheri, 33, said they bought “everything but a bedroom” after purchasing sheets, pillows, linen and quilt cover sets.

 

 

Mr Mazaheri said they were doing random shopping before Ms Tanaka was due to start work. “It was just convenient to come in,” he said. “She (Ms Tanaka) works in the city.”

It wasn’t all smooth sailing for retailers after eftpos machines crashed for about an hour at some Myer stores, leaving shoppers intending to pay by card stranded at the registers. A Myer spokesman apologised for the outage and said launch-day sales prices would be extended until Friday.

Despite hype around major Boxing Day events in Sydney, The Australian’s analysis suggests NSW consumers will spend a good deal less per capita on the day than Victorian shoppers.

Canberrans are poised to take the biggest advantage of the day-after-Christmas sales, expected to spend $152 a person aged 15 or over. Victorians are close behind at $149. NSW consumers, in contrast, are expected to spend only $124 a person, according to ARA forecasts — lower than Tasmanians’ $129. South Australians are not embracing any buyer frenzy, with a projected spend of only $93 a person.

Underwhelming or not, December remains an important month for retailers, with non-food retailers typically enjoying a 40 per cent boost in the month compared with the previous 11 months, on ANZ figures.

The Christmas effect is particularly acute for department stores, and in the recreation and fashion categories, which enjoy an uplift of more like 60-80 per cent compared with other months

AMP Capital chief economist Shane Oliver said whether consumption lifted in the months ahead “probably will be the swing factor between continued sub-par growth and growth pushing back towards 3 per cent, as per the RBA and government forecasts”.

Consumption accounts for about 60 per cent of Australia’s total economic activity, and the sharp slowdown in the economy through the second half of 2018 was led by a surprisingly steep fall in household spending growth — a trend that continued through the second half of this year, despite three rate cuts and tax relief.

Additional reporting: Eli Greenblat