Australia / Press Releases
Christmas Spending Hit By The Cost Of Living Grinch
by Hayley Munro-Smith
Dec 04 2018

Christmas spending hit by the cost of living Grinch

Industry research company IBISWorld has found that consumers will be cautious with their gift shopping this festive season, predicting that Christmas spending will only grow by 1.2% in 2018 compared with 2017.

According to IBISWorld, the rising cost of living and stagnant wages growth are weighing heavily on consumer sentiment this Christmas. As a result, consumers will be attempting to stretch their funds as far as possible by purchasing more gifts of quality and meaning, and by shopping with retailers that provide superior online and after-sales services.

“We are seeing consumers move away from purchasing traditional recreational gifts this year. Instead, Australians are spending more money on meaningful experiences (such as Christmas lunch), charitable donations and their beloved pets,” said Hayley Munro-Smith, IBISWorld Senior Industry Analyst.

 

Revenue ($ millions)

Category

Dec-13

Dec-14

Dec-15

Dec-16

Dec-17

Dec-18

2017-18 Growth %

Supermarkets

8707.0

9023.8

9442.9

9850.4

10,064.8

10,463.8

4.0

Household goods

4963.8

5357.5

5735.9

5782.3

5901.4

5949.6

0.8

Department stores

2725.5

2756.9

2913.6

2850.4

2822.6

2841.0

0.7

Clothing and footwear

2761.9

2907.0

3079.9

3330.5

3297.7

3276.8

-0.6

Electrical and electronic goods

2209.8

2401.3

2577.9

2549.5

2652.7

2575.3

-2.9

Recreational goods

791.0

798.5

799.4

781.7

801.0

732.3

-8.6

Source: Australian Bureau of Statistics and IBISWorld

On the rise:

Supermarkets

According to IBISWorld, supermarket sales are forecast to grow to $10.5 billion in December 2018 – an increase of 4.0% compared with the 2017 festive season.

“Dining with friends and family has become an important part of Christmas for many Australians, and consumers are anticipated to splash out on premium foods, beverages and snacks this year, along with Australian-made and -owned products to continue supporting for Australian farmers,” said Ms Munro-Smith.  

Charities and not-for-profit groups

Consumers are expected to open their hearts and wallets to more than just their loved ones this giving season.

“Products from and donations to charity groups and not-for-profit organisations as Christmas gifts allow Australians to support a cause that their loved ones care about, and offer an alternative to many of the mass-produced items available in department stores,” said Ms Munro-Smith.

Oxfam Australia’s increasingly popular Oxfam Unwrapped line and Oxfam Shop, which sells handmade ethical and sustainable products, are expected to draw the greatest consumer spending among charity organisations this Christmas season.

“Oxfam has been the stand-out in the not-for-profit sector for innovative consumer offerings over the past few years, and we expect the organisation to build on the momentum it has gained with its Unwrapped brand line and Oxfam Shop to boost Christmas sales this year,” said Ms Munro-Smith.   

Furry family members

Spending on gifts for pets is expected to remain strong this Christmas. According to IBISWorld, Australian consumers have become more willing to purchase premium products for their pets over the past five years, pampering and spoiling them with grooming services, expensive treats, wearable products and luxury accessories.

“Australians care deeply for their animal companions and are anticipated to maintain robust spending on pet accessories and luxuries this December,” said Ms Munro-Smith.  

On the decline:

Conversely, sales of recreational goods, such as games, toys and sporting equipment, are expected to exhibit the strongest decline in December 2018, falling by 8.6% compared with the same time last year.

“Many bricks-and-mortar retailers of recreational products will face strong price competition from online firms and low cost imported goods this season. As a result, many domestic retailers are expected to offer discounts and specials to maintain their competitiveness and support Christmas sales,” said Ms Munro-Smith.   

 

IBISWorld reports used in this release:

Supermarkets and Grocery Stores in Australia

Online Pet Food and Pet Supply Sales in Australia

Toy and Game Retailing in Australia

Department Stores in Australia

For more information, to obtain industry reports, or to speak with an analyst, please contact:

McKenna Moroz
IBISWorld Media Relations Representatives – Anne Wild & Associates Pty Ltd
Tel: +61 2 9440 0414
Mobile: 0431 781 445
Email: mmoroz@awaassociates.com.au