Back in black: spending surges at sales

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Households are well placed to spend big on retail this year and ANZ Research estimates end-of-year spending on retail will be more similar to 2020 than pre-COVID years. Strong household deposits and savings through this year as well as the improved resilience in the labour market through Delta lockdowns compared with last year have given the average household a strong buffer for end-of-year spending in 2021.

“Retail spending has accounted for a higher share of household spending in Australia since the start of 2020.”

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The recency of reopened international and interstate borders may also suppress travel spending, leading to more retail spending compared with pre-COVID. Retail spending has accounted for a higher share of household spending in Australia (and other advanced economies) since the start of 2020.

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ANZ-observed non-food retail spending on Black Friday rose 50 per cent year-on-year in 2020 and exceeded Boxing Day spending for the first time. ANZ Research expects Black Friday to be the biggest retail sales day of the end of year trading period this year.

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While a jump in electronics spending pushed up Black Friday sales in 2019, department store, women’s fashion and hobby store purchases were key categories helping Black Friday sales grow in 2020.

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Cyber Monday had the least non-food retail spending across key end of year dates in 2018 and 2019 but outpaced the week to Christmas Eve in 2020. Cyber Monday sales tend to be around 66-75 per cent of Black Friday spending and ANZ Research expects Cyber Monday sales to be around 70 per cent of Black Friday sales this year.

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ANZ Research expects the end of year trading period to be strong even if there is less discounting than usual due to supply chain constraints or inflationary pressures.

Adelaide Timbrell is Senior Economist at ANZ