Small businesses have a festive atmosphere advantage over sterile big-box stores. Industry expert Brendan Straw explains how simple touches can drive Christmas foot traffic.
What’s Happening: Forty-one per cent of Australian shoppers plan to buy Christmas gifts in physical stores this year, with 35% specifically seeking festive atmosphere, according to Shopfully research of 574 consumers.
Why This Matters: SMEs that invest in simple atmospheric elements like seasonal playlists, thoughtful lighting and warm staff interactions can differentiate themselves from sterile chain stores without stretching tight budgets.
Small retailers facing another challenging Christmas may have overlooked their most powerful competitive advantage: the ability to create authentic festive atmosphere without the sterility of big-box stores.
New research from Shopfully reveals that 41% of Australian shoppers plan to head into physical stores to buy gifts this year, with 35% specifically citing the desire to enjoy festive atmosphere as a key reason. This represents a significant opportunity for small businesses willing to invest in customer experience rather than competing purely on price.
Brendan Straw, Country Manager for Shopfully Australia, which surveyed 574 Australian consumers in December 2025, emphasised that the holiday season offers retailers a chance to differentiate through experience. “Stores will be busy this year, and that’s a big opportunity for retailers,” Straw said.
“The holiday season is your chance to shine – create an inviting space, offer immersive experiences, and make shopping enjoyable again. Promotions, personalised service and standout in-store displays will go a long way to drawing in customers.”
The findings suggest that whilst 60% of consumers plan to spend the same as last year, and 62% will be more cautious about spending, shoppers haven’t abandoned the emotional and experiential elements of Christmas shopping. They’re simply being more strategic about when and how they shop.
Atmosphere beats convenience
The Shopfully research found that physical stores remain surprisingly popular despite widespread digital adoption and online shopping convenience. Beyond the 35% seeking festive atmosphere, shoppers are visiting stores to see and compare products in real life, cited by 69% of respondents, and to take purchases home immediately, mentioned by 41%.
This preference for physical retail during Christmas stands in contrast to broader e-commerce growth trends. However, it reflects what retail experts have noted about the importance of in-store experiences during peak shopping periods, particularly for gifts where seeing and comparing products matters.
For small businesses, the festive atmosphere element offers an accessible entry point that doesn’t require competing with major retailers on scale or price. With 35% of shoppers actively seeking festive vibes, retailers don’t need massive budgets to create impact.
The data aligns with broader consumer behaviour showing that 58% of Australian businesses expect flat or declining salescompared to Christmas 2024. In this environment, differentiation through experience rather than discounting may prove more sustainable for maintaining margins.
Simple touches create impact
The opportunity for small businesses lies in understanding that festive atmosphere doesn’t require large capital outlays. Simple, intentional touches can collectively deliver the experience shoppers are seeking. Seasonal music playlists create immediate sensory signals that distinguish a shop from everyday trading. Thoughtful lighting adjustments, whether through warmer bulbs or strategic placement, can transform spaces without extensive electrical work. Coordinated window displays using existing stock rather than expensive props demonstrate creativity whilst showcasing inventory.
Perhaps most importantly, engaged staff who create warm interactions and personalised service deliver something large chain stores struggle to replicate at scale. This human element becomes particularly valuable when 35% of shoppers are specifically seeking atmosphere as part of their purchasing experience.
For small business owners, this creates clear directives. Investing in visual merchandising, ensuring adequate stock levels, training staff to provide knowledgeable service, and creating festive atmospheres can directly influence purchasing decisions during the critical Christmas trading period. Importantly, atmosphere doesn’t require large capital outlays. Seasonal music playlists, thoughtful lighting adjustments, coordinated window displays using existing stock, and engaged staff who create warm interactions can collectively deliver the festive experience shoppers are seeking without stretching tight budgets.
The investment in atmosphere may prove particularly valuable given that shoppers are already primed to visit physical stores for the sensory experience of Christmas shopping. Small retailers can leverage this preference to differentiate themselves from sterile big-box competitors that prioritise efficiency over experience.
Strategic shoppers seek value
Whilst the atmospheric element creates opportunity, small businesses shouldn’t overlook that shoppers are approaching Christmas with increased caution. The Shopfully research found that 62% will be more cautious about spending, with 57% comparing prices across stores and catalogues before making final purchases.
Shoppers started earlier this year, with 63% already beginning their Christmas shopping and many preparing wishlists as early as November Black Friday sales. Fifty-four per cent will look for sales and promotional events to stretch budgets, whilst 47% will turn to digital platforms such as online catalogues or deal-tracking tools.
Straw characterised the shift as a new wave of savvy consumers navigating financial pressures. “Aussies are opening their wallets this Christmas, but they’re doing so with more intention,” Straw said. “What we’re seeing is a new wave of savvy shoppers, or people who are sticking to their budgets, comparing prices, and making more thoughtful gift choices.”
The research also revealed gift giving to be more intentional, with nearly a third of shoppers looking for gifts that are practical and can be used daily. The majority, 63%, are interested in practical gifts they can use regularly, followed by 49% seeking great value for money. “Shoppers are prioritising practicality, longevity, and value – both for the gift giver and receiver,” Straw said.
“It’s less about following flashy trends and more about making thoughtful purchases that have real purpose. With ongoing financial pressures, many Australians are being more mindful of what’s truly essential versus what’s simply a nice to have.”
A growing number of shoppers, 27%, are also planning to buy from Australian businesses this Christmas, reflecting continued focus on shopping local and sustainably. Over half, 52%, say they’re willing to pay more for ethical or environmentally friendly products.
Physical stores draw crowds
For small businesses, particularly those selling practical categories like homewares, appliances or quality clothing, the combination of atmospheric advantage and practical product focus creates positioning opportunities that larger retailers may struggle to match.
The challenge lies in execution during what remains a financially constrained environment for many consumers. Small retailers need to balance creating inviting festive spaces with maintaining competitive pricing on practical products that deliver genuine value.
Straw framed the current environment as an evolution rather than a retreat from Christmas spending. “Christmas hasn’t disappeared, it’s simply evolving,” Straw said. “Aussie shoppers aren’t pulling back entirely; they’re just becoming more intentional. For retailers, the opportunity lies in helping consumers make smarter, value-driven purchases that still deliver joy.”
For small businesses, this may be the year that atmospheric investment pays dividends. With shoppers actively seeking festive experiences and willing to visit physical stores despite online convenience, retailers that create warm, engaging spaces whilst stocking practical, value-focused products may capture spending from consumers determined to celebrate Christmas, just more strategically than before.
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
