Retail spending in Australia has been experiencing a steady recovery, influenced by shifting consumer habits and economic conditions. While challenges like inflation and cost-of-living pressures persist, factors such as major sales events, the rise of e-commerce, and changing shopping preferences continue to shape the market. With evolving trends and government support playing a role, the retail landscape is undergoing notable transformations that impact both businesses and consumers.
Retail Spending in Australia
Retail spending in Australia has been on a slow but steady recovery path following economic pressures, including inflationary trends and cost-of-living concerns.
Several factors are driving Australia’s retail recovery, helping to boost consumer spending despite economic challenges. Key influences include major sales events, the growth of online shopping, the return of in-store experiences, rising wages, and government support measures.
Discounting and Promotional Sales
According to ABS data, major sales events such as Black Friday, Boxing Day, and End of Financial Year (EOFY) promotions have significantly contributed to a boost in consumer spending. Retailers offering steep discounts and flexible payment options have seen increased customer traffic and online transactions.
E-commerce Growth and Convenience
Online retail continues to thrive, with Australian consumers increasingly favouring digital platforms for convenience and competitive pricing. Retailers who integrate seamless online experiences, including click-and-collect services, are witnessing higher sales volumes.
Reopening of Physical Stores
Brick-and-mortar stores have seen a resurgence as consumers return to in-person shopping experiences. Many retailers have adapted by enhancing their in-store environments and providing exclusive in-store deals to attract shoppers.
Stronger Employment and Wage Growth
A stabilising job market and modest wage increases have allowed consumers to allocate more discretionary income to retail purchases. This positive economic shift supports higher spending in fashion, electronics, and home improvement sectors.
Government Incentives and Support Measures
Policy initiatives aimed at stimulating economic activity, such as tax rebates and small business grants, have indirectly boosted retail spending. These measures have provided consumers and retailers with the confidence to engage in the market more actively.
Retail Trends: Growth Peaks, Then Slows
The ABS retail trade figures for December 2024 highlight that discounting has been instrumental in increasing retail turnover.
The data was predicting that after a 0.2-per cent decline in EOFY24 and a 0.5-per cent climb in quarterly sales volumes in Q1 FY25, there would be a 0.8-per cent raise in the December quarter/Q2 FY25. The final figures show the quarterly growth that period at one per cent instead.
A closer look at each month tells more stories. There was a growth of 0.5 per cent in October and surged further to 0.7 per cent the following month – but the numbers registered at a 0.1 per cent increase for December, even despite the massive activity for Cyber Monday.
Goods Sold
The monthly turnovers for November and December 2024 showed which merchandise classes customers spent much money on during the holiday buildup even on discount deals, with seasonal adjustments factored. Clothing, footwear, and personal accessories had a killing at 1.5 per cent for November – but took a drop of 1.8 per cent in December. Cafes, restaurants, and takeout food businesses logged a 1.4 per cent increase in November but slipped to -0.5 per cent the next month.
The only big winner in that ranking was household goods, which tallied a 1.3 per cent increase in November then surged to 1.6 per cent in December. ABS business statistics director Robert Ewing attributed the increase to more customer interest in big ticket items on discount such as home electronics and furniture. For example, JB HiFi’s Black Friday sale in 2024 covered a wide array of merchandise deals including large discounts on new smartphones and soundbars.
Effects on States/Territories
The surge in consumer spending for most of Q2 FY25 only to trip hard just before the holidays was evident across Australia, with a 0.7 per cent national average turnover increase in November but -0.1 per cent in December. Some states or territories do stick out.
NSW posted good returns with a 0.6 per cent growth in November 2024, but had a more modest 0.1 per cent turnover in December. WA was just as fortunate in November at 0.6 per cent and was cushioned the next month at 0.2 per cent. The NT, meanwhile, posted a massive 1.5 per cent spike in November then took a -0.1 per cent hit by year end. SA was just as strong at 1.2 per cent in November but that growth was nearly negated the following month at -0.7 per cent. The ACT posted no growth in November but like SA took a -0.7 hit in December.
Smart Spending: Maximising Sales Without Overspending
While discount sales provide excellent opportunities for savings, they can also lead to impulsive purchases. The following are some key strategies to make the most out of sales while maintaining financial discipline:
- Set a Budget – Establish a spending limit before participating in sales events to avoid overspending.
- Make a Shopping List – Identify necessary purchases in advance to prevent impulse buying.
- Compare Prices – Use price comparison tools to ensure you are getting the best deal.
- Beware of Marketing Tactics – Retailers use urgency-driven strategies like “limited-time offers” to encourage immediate purchases. Assess whether the deal is genuinely beneficial.
- Use Loyalty Programmes and Cashback Offers – Take advantage of store memberships, reward points, and cashback deals to maximise savings.
- Check Return Policies – Ensure the retailer provides a flexible return or exchange policy in case the purchase does not meet expectations.
Key Retail Trends Shaping Australia in 2025
As Australia is making headway into 2025, some trends are expected to shape the retail landscape. Tata Consultancy Services’ ANZ/APAC retail chief Kirthi Duvoor noted a few in his article for Retailbiz.
Personalised Shopping Experiences
Retailers will continue leveraging data analytics to provide customised deals and promotions. Part of the process, though, will be to identify which “pain points” customers have in dealing with a brand to build the optimal experience for each one.
Sustainability-Driven Purchases
More consumers are prioritising eco-friendly and ethically-produced goods. Mr Duvoor said many brands are building sustainability in a product’s lifecycle to ensure they were made with minimal carbon emissions.
AI Support
The rise of AI solutions for businesses gives entrepreneurs additional space to design and implement new marketing solutions. Mr Duvoor said the work will involve real-time analysis of customer behaviour.
Conclusion
Retail spending in Australia is on an upward trajectory, driven by strategic pricing, economic recovery, and evolving consumer habits. By staying informed and adopting smart shopping strategies, both retailers and consumers can make the most of this positive shift in the market.
DISCLAIMER: This article is for informational purposes only. The data presented is based on the most accurate information present at the time of writing and may change without notice. QUICKLE is not a party in any research study.
