The Australian Retailers Association (ARA), in conjunction with Roy Morgan, has revised its pre-Christmas forecast for the November to December 24 trading period, now 1% up on last year – reaching $67.4 billion, with retailers set to rein in $9 billion in sales in the final week before Christmas.

The forecast has moderately improved after a bumper Black Friday and December’s interest rate reprieve.   

Across the Pre-Christmas period, food spending is forecasted to encompass the lion’s share of spending, making up $27 billion of the overall spend – up 3.2% from 2022. 

Household goods (down 3%) and hospitality (down 1.5%) are forecasted for a continued softening of spending in the lead up to Christmas. Department stores are projected to lead spending growth (up 3%), followed by other retailing – which includes categories such as recreational goods, books, cosmetics (up 1.6%) and clothing (up 0.6%).  

South Australia is set to record the biggest growth in sales on last year (2.6%), followed by ACT (up 2%), Western Australia (1.6%), Northern Territory (1.2%), Victoria (1.2%), Tasmania (0.9%) and New South Wales (0.7%). Spending in Queensland (up 0.2%) is tipped to record close to neutral growth.  

ARA CEO, Paul Zahra said retailers had built momentum during the successful Black Friday sales.  

“November trading by all accounts appears to have been strong, despite cost-of-living pressures, as shoppers capitalised on deals and sales to tick off their Christmas lists early, and this has helped prop up our pre-Christmas projections somewhat,” Zahra said.  

“With that said, we’re still anticipating overall a subdued Christmas – with most Australian households now turning their attention to Christmas day and finalising their fresh food choices.

“The slight increase in spending this year is being inflated by unavoidable supply chain price increases, particularly in food, and an overall increase in Australia’s population. If you exclude these factors, overall Christmas spending is in decline.

This makes for a competitive last week before Christmas among retailers, as traders compete for a smaller pool of discretionary spend. For most discretionary retailers, up to two-thirds of their profit is made during the all-important Christmas trading period, so December remains a period of uncertainty.”