Pre-Christmas competition for consumer wallets is already heating up, with businesses strongly focused on a time of year that can be make or break for so many.
According to the 13th edition of Deloitte’s annual Retail Holiday Report, Australians battling an ongoing cost-of-living crisis are planning to slash their spending by almost 20 per cent this holiday season, prompting retailers to find ways to offer more value as they look towards a more positive 2025.
“The last 12 months have brought little joy for our retailers as inflation, interest rate rises and weak demand have weighed on economic growth,” Deloitte consumer products and retail sector leader, Elise Sharpley, says.
“Cost of living pressures and the associated belt tightening are driving consumer spending intentions and actions and this is set to continue into the 2024 holiday retail season.
“On the back of real retail turnover per capita not growing since mid-2022, consumers are planning to spend $1,002 on average this year, down 18.9 per cent from 2023. Retailers will be working hard to entice these consumers to open their wallets as the silly season heats up.
“Against this backdrop, consumers are changing the way they shop, how much they purchase and the type of products they buy, so we’re looking at a more frugal holiday period ahead.”
Indeed, 76 per cent of consumers are cutting back on spending overall, but 67 per cent are still looking to make small splurges. Forty-eight per cent expect to buy fewer goods and services, while 95 per cent are seeking the best deals as their first priority and 32 per cent would walk away without some sort of discount.
“As they usually do, many consumers are still looking to splurge here and there, but they’re also telling us they expect to buy fewer products and services,” adds Deloitte retail, wholesale and distribution partner, Damien Cork.
“When they spend, nearly everyone will be seeking the best deals. As a result, discounting wars will intensify as retailers understand consumers won’t pay full price and many consumers tell us they will walk away if a discount isn’t on offer. Retailers are adapting by lowering prices as well as focusing on affordable and value-driven products, creating better in-store experiences and embracing innovation to attract new customers.
“The report also finds that consumers are continuing to flock to in-store experiences. While social and search constitute the first step of 58 per cent of customer journeys, sales transactions through online channels are likely to decline these holidays. To make the most of this dynamic, retailers must focus on integrating digital and in-store experiences so their customers can shop when, where and how they please.
“Close to 90 per cent of consumers also consider trust a key factor in their purchasing decisions, so making fair and transparent pricing and delivering great service are important considerations for retailers,” Cork adds.
