Pre-Christmas spending in 2023 is tipped to nudge up by $74,000 this year to a total of $66.8 billion.
Provisional forecasts by the Australian Retailers Association (ARA), in conjunction with Roy Morgan, are also pitting department stores to lift sales by 2.9% - the highest lift across key retail categories - to $3.64 billion.
However, spending in clothing is expected to slip by 0.8% to $5.62 billion from $5.67 billion.
Hospitality is expected to see the largest drop by 4.2% to $9.37 billion, alongside a drop of 3.2% for household goods to $11 billion.
Food retailing is poised to attract the largest spending of $26.79 billion, up 2.4% on last year.
ARA CEO Paul Zahra said a softening of spending on discretionary goods is expected given the current economic conditions.
“The marginal increase in spending this year is being inflated by supply chain price increases, particularly in food, and an overall increase in Australia’s population,” Zahra said. “If you exclude these factors, overall Christmas spending is in decline.
“For many discretionary retailers, up to two-thirds of their profit is made during the all-important Christmas trading period, so it is shaping up to be a period of business uncertainty this year.
“Last year, Christmas spending was bolstered by a record freedom spending phenomenon with delayed overseas travel, whereas this year – shoppers are expected to be much more conservative with their budgets.
“This year we anticipate a bargain-driven Christmas shopper, who will actively seek out the best deals and look for value purchases.”
While Zahra said it is shaping up to be a mixed holiday season for retailers, he said consumers will be the beneficiaries.
“With increased competition and reduced spending across discretionary categories, retailers will be motivated to entice the budget shopper,” he said.
Zahra said the success of the highly anticipated Christmas trading period will depend on any upcoming cash rate decisions by the Reserve Bank of Australia.
“Australian mortgage-holders will be carefully watching the RBA’s decisions over the next few months with bated breath, but so too will retailers.”
Across the states, the ARA and Roy Morgan data expect South Australia and the ACT to both lift by 1.2%, followed by Tasmania (0.7%), Western Australia (0.5%), Northern Territory (0.3%) and Victoria (0.2%).
Spending in Queensland and New South Wales is tipped to decline by 0.3% and 0.2% respectively.
NSW takes the largest slice in Australian spending, at over $21 billion, followed by Victoria at $17.1 billion and Queensland at $13.7 billion.