Black Friday sales and higher living costs dent December retail sales

The increased shift to Black Friday sales and the impact of cost-of-living pressures contributed to a 2.7 per cent seasonally adjusted decline in Australian retail spending to $35.2 billion in December 2023, although in trend and year-on-year terms there was a marginal rise.

The data released by the Australian Bureau of Statistics (ABS) follow a revised rise of 1.6 per cent in November and a fall of 0.2 per cent in October, with larger than usual revisions to seasonally adjusted data as the evolving seasonal pattern becomes clearer.

"The large fall in retail turnover in December was caused by a fall in discretionary spending. Consumers brought forward some of their usual December spending to November to take advantage of Black Friday sales," says ABS head of retail statistics Ben Dorber.

"This shift in spending from December to November reflects the growing popularity of Black Friday sales and the impact of cost-of-living pressures, with consumers seeking out bargains and taking advantage of discounts in November. 

"While there was a large seasonally adjusted fall in December, retail turnover rose 0.1 per cent in trend terms. This shows that underlying retail spending remains subdued when we look through the volatile movements over recent months in the lead up to Christmas."

The Australian Retailers Association (ARA) has chosen to focus on the modest 0.8 per cent increase versus December 2022 with most categories recording growth, most significantly in department stores which were up 3.7 per cent.

Other retailing (up 1.7 per cent), cafes, restaurants, and takeaway (up 1.6 per cent) and food (up 1.4 per cent) also saw modest growth.

Clothing, footwear and accessories (up 0.5 per cent) recorded a slight increase while household goods saw sales decline (down 3.2 per cent).

Most states and territories saw growth year-on-year, especially Western Australia and Tasmania which rose by 2.4 per cent and 3.1 per cent respectively, but spending declined by 0.6 per cent in Australia's most populous state, New South Wales.

ARA CEO Paul Zahra says December’s results reflected projections that 2023’s Christmas spending would tread water as shoppers tighten their budgets.

"Throughout Christmas and the Boxing Day sales, we saw bargain-driven shoppers, who actively sought out the best deals and looked for value purchases," Zahra says.

"With household budgets under pressure, Christmas in 2023 was somewhat subdued compared to previous years – a result of cost-of-living challenges. We aren’t seeing the year-on-year growth that we did in previous years.

"The rising popularity of Black Friday also impacted December’s trading, with many Australians opting to purchase their Christmas gifts earlier during the major sales event in November."

Nonetheless, he notes department stores fared particularly well in December as they capitalised on Boxing Day sales and in the final few weeks before Christmas with a range of promotional events.

"With high interest rates and increasing costs for families, we’re continuing to see a softening in discretionary spending," he says.

In response to the latest figures, ANZ Research economists Madeline Dunk and Adelaide Timbrell note expectations that this weak growth will continue throughout the first half of 2024 with potential for improvement in the second half.

"As we move into the second half of the year, easing inflation, fiscal support, tax cuts and a November rate cut should support household incomes and help lift spending," they say in a report.