Australian retailers buoyed by post-Christmas sales

Retailers are enjoying strong Boxing Day sales trading with the Australian Retailers Association predicting its estimates of $14.8 billion in spending from 26 December to 15 January will be met.

Most of this spending came immediately after Christmas with the Australian National Retailers Association estimating $1.8 billion was spent on Boxing Day itself, with $5.7 billion spent in the first week of the sales. However, the association does not have results to confirm its estimates yet.

It comes as the NAB Online Retail Sales Index for November recorded surges ahead of Christmas, rising to 241 points from 209 points in October, but year-on-year growth only edged higher to 27%.

In the 12 months to November 2012, Australians spent around $12.6 billion on online retail. This level is equivalent to 5.7% of the scale of traditional bricks and mortar retail (excluding cafés, restaurants and takeaway food) for the year to October 2012.

November is the peak month for online retail sales – with consumers allowing adequate time for delivery of their purchases prior to Christmas.

Alan Oster, chief economist at NAB, says as the online market matures, it will be interesting to observe whether consumers have greater confidence to make online purchases later in the month.

ANRA chief executive Margy Osmond says post-Christmas sales got off to a great start on Boxing Day with large numbers flocking to stores and shopping online.

“Christmas Day was one of the biggest online shopping days as people looked to cash in their Christmas present vouchers.”

Russell Zimmerman, executive director of the Australian Retailers Association, was also positive about the sales period and said the few days directly after Christmas and Boxing Day were “very strong and solid”, although sales were starting to slow down now.

“The Boxing Day sales were very big and the pre-Boxing Day sales by those retailers that were online worked very well,” he says.

The ARA predicted a 3.9% increase on last year’s post-Boxing Day sales and Zimmerman says he thinks that will be pretty close to the mark.

“Some things, like men’s clothing, are doing very well in post-Christmas sales as I suspect men have not been looked after over the last couple of years but it’s got to the point they have to buy new clothes for work,” Zimmerman says.

He says food was also a very strong performer for retailers in the sales period.

“We projected about $6 billion of post-Christmas food sales in the period until January 15 and I think that is pretty much on target to come through,” he says.

However, Zimmerman says while retailers are happy with the sales boost, they would have liked more.

“Retailers would have liked to have seen a much bigger increase. We predicted 3.9% increase in spending and $41 billion spent in in pre-Christmas sales this year, 10 years ago we used to get increases of 5% to 6% but those days have gone for a long while yet,” he says.

“If this hot weather keeps up, that will slow down some of the sales moving into the next few days as heat has an interesting effect on people going out and buying – if it gets too hot they don’t leave home.”

The strong performance comes after a promising start in 2011 dwindled to a flat result overall for retail, with the latest Australian Industry Group/Commonwealth Bank Australian Performance of Services Index falling 3.9 points to 43.2 in December.

Sub-sectors linked to household spending including retail trade and accommodation, cafes and restaurants all reported declines in activity in December.

"At the end of what was a tough year for the services sector, consumer caution, poor sentiment and the high Australian dollar all continued to weigh heavily on sales to households during the Christmas trading peak,” AIG chief executive Innes Willox says.