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Retailers set for solid Christmas sales, liquor a standout

Many Australian retailers are preparing for their peak earning period this Christmas, with business information analysts at IBISWorld predicting a strong result for department stores and spending increases for liquor retailing, restaurants and supermarkets.

An analysis by the National Retail Association (NRA) revealed that shoppers are expected to spend more than $43 billion over the last two weeks of November and in December through to Christmas Eve, with early signs suggesting total sales will be 5% higher than last year’s $40.7 billion.

IBISWorld’s Retail Analyst, Lauren Magner said that while this strong seasonal demand and forecast sales spike is set to subsidise weaker trading periods throughout the year, the Christmas period presents both opportunities and challenges for Australian businesses.

“With total retail spending forecast to jump by 35.2% this December, compared with average expenditure over the previous 11 months, all retail categories can expect a share of the spoils. However, department stores are expected to outperform competitor categories with an anticipated sales spike of 94.1%,” said Ms Magner.

Liquor retail spending is anticipated to jump by 59.4%, with Christmas parties driving demand and alcohol consumption rising over the holiday period.

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On the other hand, December spending at supermarkets and grocery stores is forecast to rise by a modest 17.3%. While supermarket purchases are essential year round, the rise in spending reflects an increase in people hosting dinners, lunches and barbecues over the Christmas period.

NRA CEO Trevor Evans said it appeared to be almost back to business as usual after several years of sluggish growth.

Of the states and territories, New South Wales is expected to be the standout performer, closely followed by Tasmania and Victoria, with increases of 9.0%, 8.0% and 6.0% respectively from last year. Western Australia and the ACT are likely to trail the other states however, with projected growth of just 2% compared with 2013.

“All in all, it’s beginning to look a lot like a great Christmas for the nation’s retailers,” Mr Evans said.

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