Ho ho ho… Santa brings good news for all you who have been good this year! The growth in online spending will more than triple this festive season as online shopping finally delivers on its promise to significantly compete with conventional retailers.
Business information analysts IBISWorld reveal that overall Christmas spending will rise by 3.9% this year, and that at the height of the silly season, the average Aussie will spend around $1,600. This will bring the total to a whopping $28.5 billion – with IBISWorld General Manager (Australia), Ms Karen Dobie, expecting most of that growth to come from online sales.
Why is online spending set to triple in growth this Christmas season?
Once again, online spending will be the standout success this silly season. Growth in online retailing will eclipse growth in any other retail segment, with IBISWorld forecasting a surge of 34.4% compared to growth just below 10% between December 2010 and 2011. This year, the closest sector on the tail of online sales is liquor retailing with 10% growth from 2011, followed by electronics with a jump of 7.7%. It seems anything and everything sells online.
“This year we’ll spend almost the same amount online as we will on toys, games and video games – all significant categories in traditional Christmas spending”, said Ms Dobie. “Electronics, clothing, footwear and travel will be the most popular picks for online sales.”
Ms Dobie said that clothing and footwear retailers are expected to be licking their wounds this festive season with growth of just 1.3% on last year, noting that this category would feel the heat from the popularity of online purchasing.
“Online sites such as theiconic.com.au, asos.com and styletread.com.au are luring customers with promises of super-fast delivery, free shipping and free returns, making it incredibly tough for bricks-and-mortar stores to compete. And since the online medium has the added advantage of targeted marketing via e-mail, social media sites (such as Facebook and Twitter), and SMS to promote daily deals and Christmas offers – it’s little wonder fashion and footwear retailers are suffering”, she added.
A number of key domestic retailers have migrated online in the past year, such as Cue and the revamped David Jones site, as they seize the opportunity to drive sales and raise awareness, and it seems the more intense the competition, the lower the prices.
Electronics still sit at the top of the tree
While electronics are always a firm favourite at Christmas time, this year will be even more lucrative for those in the tech trade. A raft of new electronics goods have flooded the market in time for Christmas such as the iPad Mini, Microsoft’s Surface, the Google Nexus 7, Nintendo Wii U – the list goes on.
“Obviously the timing of these releases has been calculated with Christmas in mind, and we can expect many a Christmas stocking to be electrified with one of the above this December 25th”, said Ms Dobie.
“Falling prices and an increasing number of kids asking for electronic goods, or at least digital toys, will also boost the take up of electronics items this festive shopping season.”
“The age compression phenomenon, which makes traditional toys obsolete from a younger age, is spurring on sales of anything electronic ahead of regular garden-variety toys. This has extended to child-focused electronics, such as LeapFrog and VTech, being popular picks at Christmas time, along with items typically targeting older kids like the new generation iPod Touch”, said Ms Dobie.
Are we eating out or in?
It is no secret that Australians love eating out, and IBISWorld forecasts December will be no different. Spending on meals outside the home is tipped to rise by 5% to $1.89 billion in the lead up to the big day.
According to IBISWorld, gourmet choices will drive up revenue in this sector, and seafood – almost a Christmas must-have – will enjoy growth in exotic varieties as Australians continue to experiment with home cooking and delight in spoiling family and friends with something special, such as premium ham and seafood dishes.
Festive fizz… let’s pop some bottles!
December is always one of the most significant trading times for liquor retailers, and this year will be no exception. IBISWorld anticipates spending will be up 10% from last year, with our current taste for premium wines, cocktails, craft beers and cider strongly influencing revenue growth.
‘Tis the season to…get away from it all
This holiday season, Australians will spend $8.45 billion on travel. This is an increase of 8.3% from last year resulting from more domestic nights spent away during school and university holidays, as well as hefty discounting from local operators, which is driving up sales for tourism operators, airlines and hotels.
Ms Dobie said consumers could also expect an influx of overseas visitors across the Christmas break with China, New Zealand and the United States accounting for the majority of arrivals.
The big bash is big no more
While Christmas spending is holding ground in many other spheres, Ms Dobie said falling business confidence and tightening business budgets would put the kybosh on lavish office parties and client events this year.
“We anticipate corporate spending will remain largely flat compared with last year”, Ms Dobie said.
“While this will vary according to the sector and organisation, the overriding trend will be for companies to host festive drinks at the office rather than putting on the all-expenses-paid big bashes of old.”
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