Dec 13 2016
According to IBISWorld, Christmas retail spending is set to remain flat this December, growing by only 0.4% on last year’s sales as consumers tighten their belts. Early indications suggest Australians are becoming more frugal this December, which will be reflected in an increased interest in early sales, deep discounting and bargains. In the lead up to Christmas Day 2016, Australians are expected to spend on a range of goods, including electricals, clothing, jewellery and much more.
‘IBISWorld expects that discounting will characterise Christmas 2016, with price conscious consumers being more discerning with their spending,’ said Mr Nick Tarrant, IBISWorld Senior Industry Analyst.
‘Across a variety of consumer industries, IBISWorld has identified behaviour in the lead up to Christmas that suggests it will be a rather unremarkable one for retailers,’ Mr Tarrant added.
Electronic goods retailing
Total Christmas spending on electronic goods is expected to remain largely flat, rising by only 1.9% compared with last year, to total $1.5 billion. This will largely be driven by a decline in big-ticket sales, such as TVs and laptops, as consumers seek budget alternatives or hold back until Boxing Day sales.
Larger players including JB Hi-Fi and Harvey Norman dominate the market and their established brand presence is likely to drive consumers in-store. However, these players may have to rely on discounts and other incentives to encourage consumers to visit their stores and websites.
Commenting on the Electronic Goods Retailing industry in the lead up to Christmas, Mr Tarrant said, ‘This Christmas season is particularly interesting due to the absence of Dick Smith Electronic’s physical stores following its exit from the industry in June. In response, big-box retailers such as Target and Big W have attempted to capture a growing share of this market, targeting value-conscious consumers.’
Jewellery and watch retailing
Christmas is the season to be jolly for jewellery and watch retailers, with overall spending anticipated to total $451.8 million in December, according to IBISWorld.
‘Fast fashion jewellery retailers, such as Lovisa, are expected to fare better than their fine jewellery counterparts this Christmas, as their lower pricepoints make them affordable as a Christmas gift,’ said Mr Tarrant.
Mid-range retailers such as Mimco and Pandora are also expected to perform well, as their established brands and growing presence throughout Australia are anticipate to drive sales. Smaller stores and luxury jewellers are unlikely to capture a large share of the Christmas market, as consumers hold back on purchasing expensive or upmarket gold, silver and diamond pieces for friends and family members.
According to IBISWorld, liquor sales are expected to grow by approximately 3.4% this Christmas compared with last year. Approximately 13% of Australian yearly retail liquor sales are made in December, as consumers buy products for Christmas dinners and as gifts for friends.
‘Rising health consciousness and declining per capita alcohol consumption are forecast to constrain growth,’ said Mr Tarrant. ‘Growth in product categories such as cider is anticipated to offset weakness among segments such as beer and spirits. Domestic demand for cider is expected to grow by approximately 6% in 2016-17, and sales generally spike over the summer season,’ he added.
Department stores’ festive takings are anticipated to decline this Christmas season, with sales expected to be 2.8% lower than this time last year. In the lead up to Christmas Day, IBISWorld expects consumers to spend $116.9 per capita in department stores.
‘Competition from online retailers and heavy discounting in the industry will negatively affect sales this Christmas,’ said Mr Tarrant.
Consumers are expected to put off luxury purchases over this Christmas season, affecting sales for David Jones and Myer, which cater for the high end and medium-to-high end of the market, respectively. The two players make up almost 30% of overall department store sales.
According to IBISWorld, overall spending on recreational goods is forecast to reach $1.0 billion over December 2016.
‘Sales of products including toys, video games and sporting equipment are expected to grow by approximately 3.2% in 2016-17,’ said Mr Tarrant.
Video game, CD and DVD sales are forecast to decline slightly this year due to the increased uptake of online media platforms, such as Netflix and Spotify, and the lack of a major new video game console releases this year. However, this trend is expected to be offset by sales growth in sporting and camping equipment due to an increase in sports participation this year.
Online retailers are expected to be the big winners this Christmas season as consumers go bargain hunting. IBISWorld expects spending during December to grow by 17.3% on last year’s sales figures, with an average $75.20 spent per capita. However, this also includes bricks-and-mortar retailers with an online presence.
‘Clothing, personal accessories, liquor and lightweight electronic goods are among the most popular online choices, as these products are often from well-known brands that consumers trust,’ said Mr Tarrant. ‘Improvements in transaction security, increased assurance in product authenticity, reduced delivery times and a growing acceptance of online shopping among older consumers are also expected to drive sales growth for e-tailers,’ he added.
IBISWorld research suggests that daily deals sites, such as Catch of the Day, deals.com.au and Groupon will target consumers that are after vouchers, coupons and other similar gift items.
Industry reports used to develop this release:
For more information, to obtain industry reports or to speak with an analyst, please contact:
Anne Wild / Shae Courtney
IBISWorld Media Relations Representatives – Anne Wild & Associates Pty Ltd
Tel: (02) 9440 0414
Mobile: 0420 736 136