Australians are set to deliver disappointment to retailers in the lead up to Christmas by significantly cutting back on their spending and willingness to use credit for non-essential items, according to new research.
The latest Dun & Bradstreet consumer credit expectations survey found that half of Australian households are less likely to spend on non-essentials in the coming months, compared to a year ago.
One in three of the 1,216 people polled by Dun & Bradstreet said that they were more focused on saving than they were 12 months ago, while 56% are worried about their financial position.
Tellingly, 37% of respondents said that they were less likely to use a credit card for Christmas purchases compared with 2011, with a mere 16% planning to increase their line of credit in order to facilitate more purchases.
Older Australians appear least likely to open their wallets over the festive season, with 53% of 50 to 64-year-olds planning to spend less on non-essential items than last year, with just 6% upping their credit limit for Christmas.
The continued consumer conservatism follows the Reserve Bank of Australia’s decision to cut interest rates by 0.25% earlier this month to 3.25% in a bid to help stave off a worsening economic outlook for Australia.
Danielle Woods, general manager of Dun & Bradstreet, says: “An increasing number of Australians are concerned about their financial security and this is weighing heavily on their plans for the Christmas period.”
“Prioritising saving over non-essential spending is a positive for the balance sheets of Australian households and the Reserve Bank is certainly encouraging this behaviour, in light of uncertain employment conditions.”
“However, it could have detrimental flow-on effects for businesses that are looking to Christmas to drive a lift in sales.”
“There is a distinct disparity between the spending plans of Australian households as Christmas approaches and the optimistic outlook of the retail industry.”
“If households tighten the purse strings as they are suggesting, it is likely we will see lower than expected retail sales growth over the remaining months of the year.”