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Retail expectations steady with shoppers to spend less

A third of Australians expect to spend less this year than last Christmas, according to a report issued by IBISWorld.

Matching inflation, Christmas spending is expected to be up 3.3 percent from last year, with retail expectations steady. Around 34 percent of Australians intend to spend less than last year, with the average shopper expected to fork out $1,213.22.

“In 2011, Australian shoppers have been savvy, seeking out the best value for money, the best range and the best service. This trend is anticipated to continue through Christmas,” said IBISWorld general manager Karen Dobie.

A total of $27.4 billion is expected to be spent this Christmas with only 20 percent of consumers planning to spend more than they did last year.

The most growth will be in online spending in the categories of clothing and footwear, electronics and books. Toys, games and video games will also remain popular purchases as consumers opt to sacrifice gifts for older relatives, friends and colleagues before cutting down on kids’ presents.

Dobie said the current age compression phenomenon means children are less interested in traditional toys and happier with electronic devices at a younger age.

“This has led to child-focused products such as LeapFrog and Vtech being popular picks at Christmas time, along with items typically targeting older consumers such as the iPod Touch, Nintendo 3DS, iPad 2 and e-readers.”

A mere two percent rise in clothing and footwear means this category will be the biggest losers, with men’s retailers potentially the only winners due to a slight rise in image-conscious males.

Food retailers will see a slight 3.4 percent increase this year and caterers, venue hire operators and restaurants are expected to be boosted by corporate Christmas spending. Leaner choices such as seafood and poultry are expected to appear on the table this year as consumers become increasingly concerned with their health.

Dobie said spending on corporate gifts this year is likely to be weak as higher volumes are offset by lower prices because of the high Australian dollar.

“Overall, we expect Australian businesses to spend $491 million on Christmas gifts and parties for staff and clients, up a healthy 9.2 percent on last year but well below the $684 million splashed out in 2007.”

Maree Sorbello

Maree Sorbello

Maree is a first year student at Sydney's University of Technology, and is one of Dynamic Business' star interns.

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