Consumers are splashing out less this Christmas
Inflationary pressures have dampened the holiday spirit of West Australians as new data from Bankwest reveals volume slowdowns in several gift-giving sectors in the lead-up to Christmas.
According to Bankwest’s latest Spend Trends report, these sectors posted year-on-year declines in both customer and transaction volumes, with electrical appliance retailers experiencing the steepest fall in total number of customers (-24%) and the volume of transactions (-29%).
On a monthly basis, transaction volumes increased for clothing stores (31%), department stores (25%) and sports/toy stores (19%), while still remaining low for electrical appliances (-6%).
“The month-on-month data shows people have hit the shops in the lead up to Christmas, but when we look at year-on-year figures, it’s clear they’re not doing so to the same degree as 2021, when financial pressures were far lower,” said Philippa Costanzo (pictured above), Bankwest general manager everyday banking.
Outside of Christmas shopping, inflation also resulted in transaction value surging by 27% year-on-year even as the number of people transacting and the volume of these transactions held steady at 1% and 3%, respectively.
The easing back of spending before Christmas is in contrast with Bankwest’s June Spend Trends report, which showed that transaction volumes had increased on a monthly and annual basis. However, by the October report, consumer spending had all but stalled as inflation and cost of living pressures started to bite.
The month-on-month and year-on-year increases seen in the number of customers and transactions for mail order businesses could be another consequence of recent economic pressures, the December Bankwest report noted, as customers turned to online purchases to avoid in-store inflation.
“We’ve seen over the past three years how resilient and adaptive Western Australians are, and this data shows the community is again changing its behaviour,” Costanzo said. “We’re in a period of economic uncertainty, with rising cost-of-living and inflationary pressures putting a strain on people’s hip pockets, so we’re seeing customers rein in spending volumes and prioritise purchase choices.”
This decision to rein in spending and prioritise purchase choices could have been the main factor for the drop in customer and transaction volumes for electrical appliances, the report noted. The sector’s dependency on international supply chains has made it vulnerable to inflation and Australian dollar impacts, driving spend value to surge 36% year-over-year despite the low customer and transaction numbers.
“The sectors that have greater exposure to international factors, be that supply chains or the performance of the Australian dollar, appear more susceptible to inflation, soaring in spend value, despite falling in transaction volume,” Costanzo added.
The Bankwest report also showed the “easing impact of COVID” on supply and demand, with the value of transactions at pharmacies (5%) being outpaced by the number of customers transacting (8%) and the volume of transactions made (10%). Airlines saw a similar trend, with the number of customers (148%) and transactions (149%) up at a year-on-year rate that was nearly twice the value of transactions (80%).
