A survey by the payment company shows that consumers are most concerned by grocery and fuel costs this festive period and are changing their spending habits to cope.
75% of shoppers to scale back Christmas spending, PayPal says
Three-quarters of shoppers plan on scaling back their Christmas purchases to manage stretched budgets, a PayPal survey finds, indicating that retailers should expect consumers to behave differently during the upcoming festive period compared with previous years.
PayPal’s survey of 1,000 Australians aged between 18 and 75 found that the percentage of respondents intending to buy less this Christmas rose by 35 per cent compared to last year when inflation and interest rates were less prominent.
But while the vast majority of shoppers said they would be cutting back, they would not be doing so in the same way, the survey found.
“Some will be spending less on gifts (39 per cent), others less on decorations and lights (39 per cent), alcohol and drinks (35 per cent) or travel and fuel (34 per cent),” it said.
Consumers’ diminished spending patterns have translated into a gloomy outlook for retailers, who are on track for a 12 per cent drop in revenue this year.
ABS retail figures released in September showed turnover grew by just 0.2 per cent, below economist expectations and down from 0.5 per cent in July.
Retailers selling household goods saw a third consecutive fall in turnover (-0.4 per cent), and the ninth monthly fall in turnover in the past 12 months.
PayPal’s survey also found that 81 per cent of shoppers planned to buy gifts online, and 62 per cent anticipated buying at least half of their total Christmas presents online.
Over 40 per cent of respondents said they felt e-commerce was a “faster and easier shopping experience” and 40 per cent said online shopping allowed for better deals and prices compared to traditional brick-and-mortar stores.
Respondents said their largest concern this Christmas would be coping with the increased cost of groceries (63 per cent), followed by the high cost of fuel (52 per cent) and cost of energy and utility bills (51 per cent).
Consumers’ concerns were also reflected in their preferences for gifts. Over half of respondents said a gift card would be the present they would appreciate the most, while one-third said they wanted to receive food or beverage items as gifts.
“Overall, Aussies love Christmas … a quarter of Australians said Christmas is the best time of the year,” the survey said.
However, it also found that one-fifth of respondents said Christmas-related spending made them worry about their financial situation.
CPI figures released this week showed that inflation crept up by 1.2 per cent in the September quarter and annual inflation had increased by 5.4 per cent, stoking fears of further rate rises before the year’s end.