Why it’s bad news for Christmas shoppers

a042ca0089d06be4d065f890afffb915 - Why it’s bad news for Christmas shoppers

Cashed-up Aussies are set to unleash billions of pent-up spending, but businesses will likely have to jack up prices during the pre-Christmas surge.

Australian retailers are set to pocket record revenues in a Christmas cash splash but many businesses will still be “forced” to jack up prices.

A year-ending retail surge is tipped in 2021 after a 12 months blighted by lockdowns, with spending during the key retail period of Black Friday, Cyber Monday, and Christmas expected to jump by billions of dollars.

But retail bosses say the beneficiaries of this pent-up demand will probably still have to hike prices amid a “perfect storm” that has sent the cost of business soaring.

And the situation is likely to continue into the new year.

Australian Retail Association supremo Paul Zahra on Wednesday said shoppers should steel themselves for heftier price tags as supply chain pressures – including shipping bottlenecks and international flight restrictions – boost expenses and limit the amount of product arriving in the country, forcing businesses to pump up prices.

Adding to the bill is a rolling staff shortage that is putting pressure on bosses to lift employees’ wages.

Mr Zahra told the Today show that while it was in retailers’ best interests to keep pricing down, it was inevitable many would be passing costs onto customers this Christmas.

“Generally, what retailers obviously want to do is they want to keep prices down because, of course, when prices go up it impacts volumes across the board,” Mr Zahra said.

“It’s important for retailers to keep the pricing down. There are sometimes where retailers have no choice though to force the prices and pass them on to consumers.

“We expect most of the pricing going into Christmas will stabilise, but going into next year we might see more price increases.”

Potential product delays and low inventories have been widely publicised in recent months amid a Covid-driven supply chain crunch, with shoppers encouraged to get in early if they don’t want to miss out on receiving their gifts.

Booksellers are among those who fear their shelves will be empty of certain titles.

Duncan Johnson, owner of the Hill of Content bookshops and chief executive and franchisor of nationwide Collins Booksellers, told ABC News Breakfast that many retailers had held off ordering stock for the fear of the unknown of what was going to happen during the pandemic.

He also said the industry was suffering because the major publishing houses, unusually, go through the one freight company – Brisbane-based XL Express.

“And that’s probably exacerbated the problem, particularly on the eastern seaboard,” Mr Johnson said.

“But they‘ve also notified us that they believe that they’ll be back on track by the end of November.”

A key issue for retailers across the board is the global shortage of shipping containers and a backlog of ships waiting to unload at ports around the world.

Mr Zahra said experts had told him that in order to reduce the bottlenecks, new ships would need to be built.

“It won’t be until 2023 we will see some easing in the supply chain. It’s an issue that retailers are very close to and watching to make sure that those prices do stabilise. It is concerning.”

Aussie shoppers are tipped to drop about $59bn in the lead-up to Christmas, more than 11 per cent higher than pre-pandemic levels.

Commonwealth Bank’s new monthly index showed consumer spending last month jumped 6.6 per cent from September and rose 4.4 per cent from the same period last year, led by travel, transport and entertainment.

The index also showed retail spending leapt 9.1 per cent from the previous month and by 4.1 per cent compared with October 2020.

Meanwhile, National Australia Bank data also showed lockdown-weary Victorians were particularly champing at the bit to splash some cash, spending more than $2bn in the first fully reopened week from October 30 to November 6.

The biggest chunk of that money was spent on retail, forking out $800m, up 25 per cent on pre-pandemic levels in 2019.

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