Christmas crowds spend up after slow start

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Australians spent big in the lead up to Christmas but they sure took a while to get going.

Retail industry expert Russell Zimmerman says retailers were anxious at times in the festive season before a last-minute sales-led recovery.

The executive director of the Australian Retailers Association says many leading retailers spoke of “very weak” sales in early and mid-December before deciding to throw sales.

“There was a fair bit of nervousness around,” Mr Zimmerman told AAP.

“I walked along the streets of Sydney and I saw retailers with sales signs of up to 70 per cent.”

Shoppers took notice, delivering a surge of sales in the week before Christmas and continuing their spending through Boxing Day and into the new year.

Christmas is a crucial time for the $265 billion Australian retail industry, with IBISWorld estimating department store sales spike by more than 90 per cent in December.

Some retail sectors fared better than others.

Homewares dealers did well, Mr Zimmerman said, likely because of an active Australian housing market in recent months.

“People are buying new barbecues, new outdoor tables, new small appliances – that market has been strong.”

Clothing and footwear retailers are doing it tough, which Mr Zimmerman attributes to overseas retailers entering the Australian fashion market.

Multinational operators like Swedish giant H&M, which opened huge stores in Melbourne and Sydney last year, have arrived with ruthless competitiveness.

“Some of them have said they’re going to put prices to what they are around the world,” Mr Zimmerman said.

Morningstar retail analyst Daniel Mueller said listed retailers’ fortunes varied depending on their categories.

Electrical retailers like Harvey Norman have enjoyed a renaissance after struggling in recent years, while clothing and apparel seller Kathmandu has struggled as has discount retailer the Reject Shop.

“I think expectations were for a reasonable Christmas – not hitting it out of the park but not a weak one,” Mr Mueller said.

“This year, consumer confidence is lower – things are looking a little softer with the dollar and commodity prices coming off.”

Other factors have played a part. Unemployment remains high at 6.1 per cent, but filling up the family car has become cheaper in recent months.

Meanwhile, the appetite for online shopping continues to grow.

Matt Bullock, CEO of online payment gateway eWay, says the company recorded a 20 per cent rise in transactions from mid-November to mid-January compared to the 2013-14 season.

The company, which handles one in four online transactions, estimated Australians spent a record total of $2.95 billion online in the two-month period and $35.8 million on Boxing Day alone.



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