Retail

Australians to cut holiday spending by 20% amid cost-of-living crisis

23 Sep '24

2 min read

Australians to cut holiday spending by 20% amid cost-of-living crisis

Pic: Adobe Stock

Insights

Australians are expected to reduce holiday spending by nearly 20 per cent this year due to cost-of-living pressures, as per Deloitte's Retail Holiday Report.
Retailers face intensified competition, focusing on discounts and value-driven products as consumers seek deals.
Despite the challenging economic environment, retailers remain cautiously optimistic about improved consumer confidence in 2025.

Australians are set to significantly reduce their holiday spending this year, cutting back by almost 20 per cent, as the country grapples with a continued cost-of-living crisis. Deloitte’s latest Retail Holiday Report reveals that consumers are feeling the pinch of inflation, rising interest rates, and weak economic growth, forcing retailers to adapt to more frugal spending habits.

The report, which surveyed 1,000 consumers and gathered insights from retailers, shows that holiday spending will be more focused on value than ever before. The average Australian plans to spend $1,002 this holiday season, down nearly 19 per cent from last year. Shoppers are seeking the best deals, with 95 per cent prioritising discounts, and 32 per cent ready to walk away from purchases without one. While 76 per cent of Australians are cutting back, many still plan to make small indulgent purchases, showing a balance between restraint and splurging, Deloitte said in a press release.

For retailers, the pressure is on, with just 51 per cent expecting sales growth, a drop from previous years. The report also highlights an increase in retailer optimism, with 41 per cent anticipating an improvement in consumer confidence over the next year, up from just 10 per cent in 2023. This cautious optimism contrasts with the ongoing challenge of adapting to consumers’ tightening budgets.

Retailers are expected to intensify discounting strategies, especially during major November sales events like Black Friday and Cyber Monday, which continue to grow in influence. However, traditional holiday shopping periods in December, leading up to Christmas and Boxing Day, remain the most important for overall sales.

Looking ahead to 2025, Deloitte’s report suggests that while the current challenges for the retail industry remain, there is hope on the horizon. More than 40 per cent of retailers foresee a rebound in consumer confidence, indicating the potential for a stronger retail market in the year to come. Retailers are focusing on creating better in-store experiences, embracing digital innovation, and prioritising trust and transparency in their pricing to attract budget-conscious consumers back into spending.

Fibre2Fashion News Desk (KD)

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