>
What cost of living crisis? Aussies desperate for a Boxing Day bargain queue for miles and wait outside stores hours before opening as experts predict a $23.5 billion sales bonanza
- Australian Retail Association expects $23.5bn in post-Christmas sales
- Crowds queued for miles on the roads around a Sydney Direct Factory Outlet
- Record sales from Boxing Day expected before 2023 slowdown as rates rise
A year ago Australians queued for hours for a covid-19 test, now they’re lining up for a Boxing Day bargain.
The worst cost-of-living crisis in more than three decades has barely dampened the enthusiasm of shoppers at department stores and fashion stores.
Traffic queues stretched for miles outside the DFOs, or Direct Factory Outlets, at Homebush in western Sydney and in Melbourne with crowds gathering Monday morning at the gate hours before opening time.
A year ago, Australians queued for hours for a covid-19 test; now they’re lining up for a Boxing Day bargain (pictured, shoppers on George Street in central Sydney on Monday)
The Pitt Street mall in the city also saw queues form outside Myer before the doors opened at 7 a.m.
The Australian Retailers Association forecasts Australians will spend a record $23.561 billion on Boxing Day through mid-January, an increase of 7.9 per cent compared to the same post-Christmas period a year ago.
New South Wales was expected to account for almost a third of that at $7.431 billion, compared with $6.102 billion in Victoria and $4.848 billion in Queensland.
But Paul Zahra, a former chief executive of David Jones who now heads the Australian Retailers Association, said retail spending is likely to slow in 2023 as higher interest rates make life difficult for consumers.
“While it is encouraging to see continued record results for retail, it is important to recognize that there are a variety of factors influencing the results, including inflationary pricing and off-season weather affecting the fashion industry,” he said. .
Department stores were expected to post an 8.9% increase during this post-Christmas period, compared to the previous year, but clothing sales were pointing to an even higher increase of 11.4%.
Hospitality was expected to see a much larger 30.2 percent increase in billing.
“It’s been a difficult year for many, and this year we’re seeing what we call ‘freedom’ spending, where people reward themselves after an intense and challenging period,” Mr Zahra said.
Traffic queues (pictured) stretched for a kilometer outside the DFO warehouse, or Direct Factory Outlet, in Homebush, western Sydney.
Crowds gathered Monday morning at the gate hours before opening time (a queue at Homebush is pictured)
“The rush to get out and indulge the senses, to eat, drink and be merry, remains a constant during this holiday period as Australians regain their post-pandemic mojo.”
Australians, however, are battling the worst cost-of-living crisis in 32 years, with inflation in the year to September rising 7.3 percent.
The Reserve Bank has already raised interest rates eight times since May and Westpac and ANZ predicted more rate hikes in February, March and May that would take cash to an 11-year high of 3.85 percent, above a maximum of 10 years existing. of 3.1 percent.
ANZ’s own customer card data showed spending on items, other than food, in November and December was at the same level as in 2019, despite inflationary pressures.
The Australian Retailers Association forecasts Australians will spend a record $23.561 billion on Boxing Day through mid-January, an increase of 7.9 per cent compared to the same post-Christmas period a year ago (in the Australian Retail Association). photo, a shopper outside the Queen Victoria Building on Sydney’s George Street on Boxing Day)
Senior economist Adelaide Timbrell said this was in stark contrast to year-end spending in 2020 and 2021, when consumers hoarded savings during lockdowns, leading to pent-up demand.
More rate increases in 2023 were expected to curb retail spending, as many home borrowers with ultra-low 2 percent fixed-rate mortgages switched to variable rates above 5 percent.
“The transition from pent-up demand post-Covid to a rate- and inflation-driven reduction in the household budget will intensify in 2023 as fixed rates are cut,” Ms Timbrell said.
The retail sector is still struggling with South African conglomerate Woolworths Holdings Limited last week selling the 184-year-old department store brand David Jones to Australian private equity group Anchorage Capital Partners for $100 million, or one-twentieth of the $2.1 billion they paid in 2014.
China’s lockdowns this year have worsened global supply chain constraints, as Russia’s invasion of Ukraine sent crude prices soaring.