Pre-Christmas retail expected to match 2020 highs

By Fergus Halliday

November 02 2021
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Experts say that pent-up demand will properly match pre-Christmas retail spend to $58.8 billion.

Pre-Christmas retail expected to match 2020 highs

With lockdowns on the wane, expectations are high that consumers will spend to make up for lost time.

According to the Australian Retailer Association (ARA) and Roy Morgan, overall spending for pre-Christmas retail is expected to come in at around $58.8 billion.

While this figure is more or less in line with pre-Christmas retail spending in 2021, it still represents an 11.3 per cent increase on pre-pandemic conditions.

Roy Morgan CEO Michele Levine said that the company’s forecast reveals a country on the move, and one with all the usual signs of pent-up demand.

“No one believed that spending this coming Christmas could match the highs of last year, but as the population emerges from the most punishing crisis in a hundred years, shoppers are looking to reward themselves and their families,” she said.

However, partially as a consequence of the pandemic, Ms Levine noted that a greater proportion of this seasonal spending is going to be online.

“The COVID five-year digital acceleration means many more Australians are shopping online, so this Christmas we will see much more of a mix between in-store and online shopping,” she said.

ARA CEO Paul Zahra said that the positive trend in spending was a positive sign for retailers and small businesses battered by the conditions and restrictions of the pandemic.

“There’s a lot of Christmas cheer in these numbers, with the overall trend looking positive, and that is great news for small businesses and discretionary retailers who have suffered through some of the longest lockdowns in the world this year,” he said.

Roy Morgan’s latest dataset also put a price on the economic impact of recent lockdowns, estimating that it suppressed as much as $131 million in retail trade per day.

“Unsurprisingly, these impacts have been most keenly felt in NSW and Victoria, at $40.4 million and $55.2 million per day, respectively,” Mr Zahra noted.

“These impacts will continue to weigh on annual growth in retail trade and will be compounded by the reduction in government stimulus payments and the end of ‘mortgage holidays’ for tens of thousands of Australians in the coming months.”

While the retail sector is cycling off the back of a bumper Christmas last year, Mr Zahra said that this latest release of pent-up consumer demand couldn’t have come at a better time.

“The Christmas trading period is critical, as it’s the time when most discretionary retailers make up to two-thirds of their profits for the year,” he added.

Breaking the numbers by state, Roy Morgan expects retail trade to grow the most in Victoria, Tasmania and the ACT. However, with NSW and WA largely flat and Queensland, SA and NT expected to contract, 2021’s sum total here isn’t all that different to 2020’s.

For those who still need to start on their Christmas shopping, Mr Zahra said that haste may be a virtue.

“With elevated online sales, suppressed shopping demand, global supply chain disruptions and local delivery issues, the key message to consumers for this Christmas [is] ‘tis the season to shop early,” he said.

About the author

Fergus Halliday

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

About the author

Fergus Halliday

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

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