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Christmas retail ‘solid but unspectacular’

Roy Morgan’s annual Christmas retail sales forecasts conducted in conjunction with the Australian Retailers Association (ARA) indicate Australians will spend over $52.7 billion across retail stores during the Christmas trading period.
Retail by categoryForecast retail spending this Christmas of over $52.7 billion is an increase of 2.6 percent from the $51.4 billion of retail expenditure during the 2018 Christmas trading period.

However the savage bushfires in NSW and Queensland add a factor of uncertainty to the usually accurate Roy Morgan/ARA forecast, which covers the period from covering November 12 to December 24.

‘We live in the best country on Earth, but that comes with some terrible drawbacks; one of those is summer disasters – fires, cyclones, floods – that sadly afflict some parts of the country,’ Russell Zimmerman, executive director of the Australian Retailers Association said.

‘The ARA is expecting a solid if unspectacular retail trade as Christmas approaches,’ he added.

With the 2019 inflation rate of 1.7 percent subtracted,  the annual pre-Christmas growth rate falls to just 0.9 percent.

Growth in retail expenditure is predicted across all six categories measured with spending on Food expected to grow by 3.2 percent from a year ago to nearly $21.7 billion. Also set to grow strongly will be Apparel including clothing, footwear and accessories up 3 percent to almost $4.2 billion.

Hospitality businesses are forecast to grow by 2.3 percent to an expenditure of well over $7.4 billion and an impressive $8.8 billion is expected to be spent on Household Goods this Christmas, an increase of 0.6 percent from a year ago. Department stores are set to experience slower growth than other categories, up by 0.5 percent, to overall spending of almost $3 billion.

The category ‘Other retailing’ which for some reason splits off online retailing for all other categories, is predicted to experience the fastest growth of all, up by 3.7 percent to spending of over $7.6 billion.
Retail by stateGrowth is expected across the nation led by Queensland, up by 3.6 percent to over $10.6 billion, while Victoria follows, up by 3 percent to over $13.8 billion, and Tasmania up by 2.3 percent to $1.06 billion.

‘The annual ARA/Roy Morgan Christmas retail spending forecasts predict a spending increase of 2.6 percent in 2019 to over $52.7 billion in the important pre-Christmas retail period,’ said Michele Levine, CEO, Roy Morgan. ‘This is slightly below the 2.8 percent growth of a year ago although remains well above the current ABS Inflation rate of 1.7 percent.

‘The small drop in growth from a year ago is in line with other indicators such as the ANZ-Roy Morgan Consumer Confidence Index which is now at 111.1 and has averaged 112.0 since early September. This is about 5 points down on a year ago when the index averaged 117.4 in the pre-Christmas period of 2018.

‘The pre-Christmas retail period has begun this year with many parts of Australia, particularly in New South Wales and Queensland, facing devastating bushfires and uncertainty about how long these conditions will persist. We recognise that the ongoing threat of bushfires introduces a significant degree of unpredictability to these forecasts and we want to send our goodwill and prayers to everyone impacted by this natural disaster for a safe and happy Christmas and New Year period.’

Russell Zimmerman said ARA/Roy Morgan forecasts for pre-Christmas retail trade offered some cheer for a sector that has struggled in 2019 but acknowledged this came as much of Australia faced risks of natural disaster and a bleak Christmas indeed.

Mr Zimmerman  emphasised the Roy Morgan/ARA forecast was predicated on the regions ‘getting lucky’ by avoiding bushfires or other natural disasters.

Mr Zimmerman said the ARA/Roy Morgan forecast of 2.6% retail sales growth from the equivalent period in 2018 reflected the difficult year the sector has faced in 2019 but offered retailers some cheer and the prospect of better times in 2020.

‘While the headline figure is down on 2018, it’s better than we’ve seen in recent months,’ Russell said.

 

 

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