Rising interest rates force thousands of Aussie families to scale back this Christmas
- Replies 4
The festive season, typically a time of joy, is also known to be the busiest shopping period of the year. Retailers usually look forward to this time of the year to rake in profits.
Unfortunately, it might be a bit of a squeeze for many Australian families this year as increasing cost-of-living pressures and even the possibility of additional hikes in interest rates might put a significant strain on their holiday budget.
In response to the budget-conscious attitude developing among consumers, many businesses have started offering attractive discounts early on leading up to the Black Friday sales, hoping to lure in thrifty shoppers seeking Christmas deals.
Paul Zahra, the former boss of David Jones, who now leads the Australian Retailers Association (ARA), has noted a shift in shopping behaviours due to the ongoing financial crunch.
'What we're finding is that consumers [have become] a very much budget-conscious consumer, driven by value,' he said.
He also added that 'consumers still want the joy of Christmas, of course, but they're shopping on a budget'.
Unfortunately, household budgets are being stretched as we head into the Christmas season, with groceries, fuel and electricity prices at near-peak levels.
Data analysis from the ARA and research partner Roy Morgan predict that the spending between early November and Christmas Eve will hit a total of around $66.8 billion. Billions more are predicted to be spent during the Boxing Day sales period.
However, this number remains pretty much the same as last year, adjusted for population growth (which is up by 2 per cent) and high inflation, which the RBA forecasts will stand at 4.5 per cent by year-end.
Furthermore, the ARA's predictions indicated an increase in spending on food, books, and cosmetics leading up to Christmas.
However, Australians are likely to cut back on household goods, hospitality, and clothing.
Westpac data reveals that over 70 per cent of Aussies plan to reduce their spending during the festive season compared to last year.
The average budget per individual is expected to be around $863 for the entire festive season, excluding gift cards and loyalty programs. This cost covers everything likely to be purchased, including food, decorations, events and presents.
'For small business owners, if they don't succeed through Christmas, they won't have enough cash to sustain them through the winter months...it's a really important, crucial time for trading,' Mr Zahra said.
Businesses without an online presence will also feel the pinch, as 32 per cent are predicted to purchase their Black Friday items and order most of their necessities online.
Zahra also warned that another interest rate hike this December could have a severely detrimental impact on the retail sector. In anticipation of such a move, retailers are starting their sales early, aiming to minimise the potential blow.
'Retailers are trying to pull the money out of the market as quickly as possible because they don't know what December is going to look like...they are beholden to the RBA decision,' he explained.
'Retailers are doing it very, very tough. While there's a cost-of-living crisis, there's also a cost of doing business crisis...we've got very subdued discretionary spend.'
According to newly released figures, softened household spending growth is becoming more prevalent, reflecting the ongoing squeeze on the cost of living.
As the pressure to find the perfect present builds up, one savvy shopper named Alice Zhao has shared her secrets to getting the best bargains and making your Christmas budget stretch further.
The Sydney-based mother of two young boys has been using ShopBack, a cashback and rewards platform, to get money back on her spending for the past six months.
She's found it particularly useful for retail goods and travel purchases. In just half a year, she's collected about $2,000 in cash back, with the majority coming from travel bookings.
She also emphasised the importance of planning and preparation. She creates a Christmas wish list well in advance, ready to pounce when a good deal comes along.
You can read more about Alice’s tips here.
Members, have you started budgeting for the upcoming festive season? Let us know which items you plan on spending the most (and least!) on this coming Christmas!
Unfortunately, it might be a bit of a squeeze for many Australian families this year as increasing cost-of-living pressures and even the possibility of additional hikes in interest rates might put a significant strain on their holiday budget.
In response to the budget-conscious attitude developing among consumers, many businesses have started offering attractive discounts early on leading up to the Black Friday sales, hoping to lure in thrifty shoppers seeking Christmas deals.
Paul Zahra, the former boss of David Jones, who now leads the Australian Retailers Association (ARA), has noted a shift in shopping behaviours due to the ongoing financial crunch.
A shift in the shopping behaviour of Aussies has been observed due to the ongoing financial crisis. Image source: Freepik.
'What we're finding is that consumers [have become] a very much budget-conscious consumer, driven by value,' he said.
He also added that 'consumers still want the joy of Christmas, of course, but they're shopping on a budget'.
Unfortunately, household budgets are being stretched as we head into the Christmas season, with groceries, fuel and electricity prices at near-peak levels.
Data analysis from the ARA and research partner Roy Morgan predict that the spending between early November and Christmas Eve will hit a total of around $66.8 billion. Billions more are predicted to be spent during the Boxing Day sales period.
However, this number remains pretty much the same as last year, adjusted for population growth (which is up by 2 per cent) and high inflation, which the RBA forecasts will stand at 4.5 per cent by year-end.
Furthermore, the ARA's predictions indicated an increase in spending on food, books, and cosmetics leading up to Christmas.
However, Australians are likely to cut back on household goods, hospitality, and clothing.
Westpac data reveals that over 70 per cent of Aussies plan to reduce their spending during the festive season compared to last year.
The average budget per individual is expected to be around $863 for the entire festive season, excluding gift cards and loyalty programs. This cost covers everything likely to be purchased, including food, decorations, events and presents.
'For small business owners, if they don't succeed through Christmas, they won't have enough cash to sustain them through the winter months...it's a really important, crucial time for trading,' Mr Zahra said.
Businesses without an online presence will also feel the pinch, as 32 per cent are predicted to purchase their Black Friday items and order most of their necessities online.
Zahra also warned that another interest rate hike this December could have a severely detrimental impact on the retail sector. In anticipation of such a move, retailers are starting their sales early, aiming to minimise the potential blow.
'Retailers are trying to pull the money out of the market as quickly as possible because they don't know what December is going to look like...they are beholden to the RBA decision,' he explained.
'Retailers are doing it very, very tough. While there's a cost-of-living crisis, there's also a cost of doing business crisis...we've got very subdued discretionary spend.'
According to newly released figures, softened household spending growth is becoming more prevalent, reflecting the ongoing squeeze on the cost of living.
As the pressure to find the perfect present builds up, one savvy shopper named Alice Zhao has shared her secrets to getting the best bargains and making your Christmas budget stretch further.
The Sydney-based mother of two young boys has been using ShopBack, a cashback and rewards platform, to get money back on her spending for the past six months.
She's found it particularly useful for retail goods and travel purchases. In just half a year, she's collected about $2,000 in cash back, with the majority coming from travel bookings.
She also emphasised the importance of planning and preparation. She creates a Christmas wish list well in advance, ready to pounce when a good deal comes along.
You can read more about Alice’s tips here.
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