The peak retail industry body warns of a Christmas devoid of cheer, with end of season sales forecasted to grow below inflation.
The Australian Retailers Association projected $39.5 billion in sales from mid-November to December 24, only a moderate 2.2% higher than last year.
ARA executive director Russell Zimmerman says the forecast was even more pronounced for industries that rely on discretionary spending.
“ARA predictions indicate apparel and footwear sales could slump down 1.9% lower than last year’s festive trading period. Department stores are also expected to drop by 1.5%.”
“Conversely, household, food and other retailing are all set for a boost compared to last year, showing shoppers are more likely to spruce up the house and put on a family feast rather than put any more presents under the tree,” he says.
Zimmerman says retailers saw “a glimmer of hope” when interest rates were cut in December. Many hope a December rate cut will act to boost Christmas sales.
“Industry categories which traditionally count on the festive season as their biggest trading period will be bracing themselves for more of the disappointing trade they have experienced over the last 18 months,” he says.
On a state-by-state basis, Western Australia is expected to see the largest sales growth, with total sales forecast to be 8% higher.
New South Wales is forecast to see a total rise of 0.8%, Victoria an increase of 1.5%, while South Australia is forecast to experience no sales growth at all.
The forecast matches dire predictions by David Jones, which yesterday affirmed its guidance of a 15-20% decline in first-half after-tax profit.
The upmarket department store posted an 11% drop in its sales in the three months to November, its largest quarterly sales decline since it publicly listed in 2000.
David Jones CEO Paul Zahra said in a statement yesterday that the store’s core customer base was holding off from buying following a decline in their total wealth due to declining economic conditions.
“Stores located in the best demographic areas saw the most marked decline in trading. Foot traffic and basket size were down in all stores,” he said.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
