The truth behind another Boxing Day sales 'record'

Shoppers in the Myer department store for the Boxing Day sales in Sydney. Photo: AAP Image/Paul Braven
Shoppers in the Myer department store for the Boxing Day sales in Sydney. Photo: AAP Image/Paul Braven

Another year, another Boxing Day sales "record". If it wasn't, we would really be in trouble.

The $2.4 billion sales prediction from the Australian Retailers Association is in reality a measly improvement on the 2016 results, as is the $17.8 billion figure for the entire post-Christmas period.

After accounting for inflation and population growth, the extra 2.9 per cent, or $500 million, expected to flow into shops is actually a downgrade - despite NSW Premier Gladys Berejiklian performing her best sales pitch in front of the cameras for a Boxing Day of "bumper trade".

Much to the frustration of Treasurer Scott Morrison, Australians have not been spending enough in the lead-up to a period when many retailers expect to net up to half their annual revenue and keep 1.2 million people employed in the $310 billion sector.

This is not just a problem for shopkeepers, but also for Treasury's tax receipts and the wider economy.

The fear of bill shock through rising energy prices, household debt and stagnant wage growth have all combined to make retail the underachiever of the Australian economy - and the retailers association knows it.

"All is calm, all is bright, Boxing Day sales a big delight," its statement read on Tuesday.

In other words, move on, nothing to see here.

But the optimism masks the reality of Roy Morgan's weakest forecast since at least 2014, where it predicted a 3.6 per cent rise, followed by a 4 per cent forecast in 2015 and 2.9 per cent increase in 2016.

Australian Retailers Association executive director Russell Zimmerman described the numbers as "fairly strong", before adding an immediate caveat: "Talking to retailers, they'd been hoping it would be 4.5 to 5 per cent."

In a sign of just how nervous some businesses have become, shoppers in Sydney's Pitt Street reportedly queued from 3am to be the first in line - only to find there were no discounts in some stores this year.

Tellingly, the single biggest threat to retailers, the internet, is still classified as "other" on the association's sales forecasts.

It has the highest rate of growth of any category at 4 per cent, but it is also the least likely to have its proceeds go into Australian hands or employ local workers. And we have yet to see the full "Amazon effect" on Australian shores.

The Treasurer will be hoping the Christmas splurge turns around the most recent household consumption growth figures of just 0.1 per cent, the weakest result since the 2008 global financial crisis.

But if the downbeat predictions behind the "record" headlines from a typically optimistic peak body are anything to go by, I doubt many would be holding out much hope.

This story The truth behind another Boxing Day sales 'record' first appeared on The Sydney Morning Herald.