Marketing Strategy
What can we expect from Consumer Spending in the Lead up to Christmas?

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Angie Smith
November 2, 2020

The Christmas period is a critical time of year for most businesses, and there’s no doubt that this year’s Christmas season will be like none other. Knowing what to expect from consumer spending for the balance of the year will not only help with planning, but it will put you in the best position to maximise your sales and revenue during this important period.

Of course, it is hard to predict exactly what will happen with so much in flux in the marketplace at the moment. With that in mind, let’s take a look at what the experts are saying and what we can expect to the best of our knowledge.

There are a few different schools of thought of what we can expect in the lead up to Christmas this year. Most economists are saying that we are coming out of a recession, but there is still pain to come. Last week, Reserve Bank deputy governor Guy Debelle told a Senate estimates hearing that the September quarter is expected to show economic growth, which would mean that Australia is technically out of recession.

This is good news for Australian businesses and indicates that Victoria’s lockdown has not had the grave impacts on the nation’s economy that many predicted. However, this doesn’t mean that we are out of the woods – most experts agree that there are more challenging times to come for the Australian economy, and for many Australians.

We have an idea of what to expect from Debelle’s comments, but the official figures for the September quarter will not be released until December. Furthermore, Debelle stressed that much is still unknown, saying “we’re having a lot of trouble trying to understand where we are let alone where we are going”.

It is important to remember that economic growth is measured by comparing GDP from one quarter to the next. In this case, it will compare the latest figures to the June quarter, when Australia’s GDP fell by 7%. Therefore, even if GDP proves to have grown slightly in the September quarter compared to the previous one, some experts are warning that the economy will still be considerably smaller than this time last year.

We can therefore expect that consumer spending in the run-up to Christmas will be significantly down compared to last year, although the situation will perhaps not be as dire as previously feared. Promising figures from September show that retail trade was at similar levels to the same time last year in every state except Victoria, which was down only 1.5% seasonally adjusted.

Both essential and discretionary consumer spending saw a surge in July, following the second stimulus package and new policies on super withdrawals. Even after settling down following this surge, consumer spending in August was greatly up from the low points in April and May.

We’re also seeing significant shifts to mobile purchases and e-commerce: according to Australia Post, over one million Australian households shopped online for the first time between March and September this year, and August was our biggest month ever for online shopping. Businesses that can step up their e-commerce and particularly mobile e-commerce presence will likely maximise their sales for the Christmas period.

People are not only shopping more on their phones, but they are also spending more time on their mobile devices in general, including non-digital age groups. One survey found that 38% of Gen Xers and baby boomers have spent more time on mobile devices since the onset of the COVID-19 pandemic. This means that businesses should consider stepping up their mobile marketing and advertising, including for target audiences in these demographics.

Experts have a variety of different takes on the Australian economy and consumer spending for the rest of 2020, but there is one thing they all agree on: we can’t make concrete predictions. With so much still unknown and it being difficult to predict what will happen, probably the most important part of any media and advertising strategy for the rest of 2020 is flexibility. It is critical that businesses pay close attention to how conditions develop and are ready to adapt as things change.

About Angie Smith
Before founding independent agency MediaSmiths in 2007, Angela had worked on the agency, broadcast, and publishing sides of the media industry and has an incredible insight into how each world works. Since then, Angela has worked across numerous well-known brands covering the whole spectrum of media, and leverages this know-how with her experienced wider team to get the best results for clients.

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