Interpac Business and Migration Solutions Melbourne Australia

November 16, 2009

Stores hoping for an increase on last year's Christmas sales may be disappointed, with a consumer survey showing more people cutting back, rather than ramping up, gift spending.

The monthly Westpac - Melbourne Institute consumer survey for November asked two extra questions about people's spending intentions this Christmas.

About 50 per cent of survey respondents said they would spend about the same this year as last Christmas, but 35 per cent said they would cut back gift spending, while only 14 per cent thought they would spend more.

If the survey proves accurate, it will be a blow to many retailers who have publicly stated their anticipation of improved December quarter sales, after the financial crisis put a slight dampener on the retail spend last Christmas.

Both department store giants, Myer and David Jones, say an improvement over last year's Christmas sales figures is crucial for them to reach their forecast sales and profit figures for the current financial year.

Westpac's senior economist, Matthew Hassan, notes in the report that the absence of a cash boost to low-income households, such as last year's Government cash payments to pensioners and those on means-tested family benefits, has seen 45 per cent of those earning less than $40,000 planning to cut their gift spending.

"This seems to confirm the impact of last year's fiscal payments which were predominantly paid to low income households," he wrote.

Aside from the lack of Federal Government cash payments, Mr Hassan says there is sometimes a tendency for people to underestimate how much they will spend on gifts.

"Christmas spending intentions are at odds with buoyant levels of consumer sentiment," he noted.

"Some of this is likely due to the fiscal boost to spending this time last year but there may also be a regular bias towards restraint heading into Christmas that eases as the season gets under way."

The survey also asked people to estimate how much they are likely to spend on gifts this year.

The national average was for $317 of gift spending, but those in Western Australia were the most generous gift givers in monetary terms, expecting to spend $371, while Queenslanders and South Australians planned to spend the least, at $293 and $294 respectively.

(From ABC News)