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Christmas Spending To Drop Despite Online Retail Growth

For 2017 research shows online spending has grown by 15 per cent however, the overall revenue will drop marginally by 0.2 per cent.

According to IBISWorld, it is attributing the overall decline to lower discretionary incomes, negative consumer sentiment, and price discounting across the retail sector.

The reason why online is beating other categories is consumers are driven online by the allure of lower prices and better product ranges.

Jason Aravanis, analyst at IBISWorld says, “Overall, IBISWorld has observed early signs that retailers will struggle to outperform over the 2017 holiday period. Consumers are tending to transition to cheaper online retailers, particularly as the entrance of Amazon into the market increases the awareness of online platforms.

Aravanis says the introduction of Amazon has increased the popularity of shopping online, “Per capita online spending this Christmas is expected to reach $83.34, up from $76.68 in the previous year.”

Chart indicating growth since December 2013.

Consumers are more likely to shop online for items that are unlikely to be damaged during shipping, such as clothing. Increasing confidence in transaction security and shorter delivery times are also likely to spur greater use of online shopping platforms.

The entrance of Amazon is likely to significantly increase retail trade over future Christmas periods, as consumers become aware of Amazon’s discounted prices, short delivery times, and wide product range.

Arvanis says, “The company’s launch in Australia has been significantly more aggressive in comparison to other countries, and IBISWorld expects Amazon to ramp up competition across retail industries.

For electronic goods spending is expected to decline 1.2 per cent compared with 2016 to $1.7bn. Even though technology advances and products continue to grow, revenue has fallen due to strong price-based competition, progressive declines in the average price of some domestic appliance categories, and weak consumer sentiment.

Aravanis says, “This Christmas season is likely to be particularly interesting due to the recent entrance of Amazon into the Australian market. Amazon is expected to try and capture to the trust of Australian consumers during this Christmas period. IBISWorld expects Amazon to aggressively drive down prices, however this may not occur until after Christmas as Amazon integrates manufacturers into their local supply chain. Other large players, including Harvey Norman and JB Hi-Fi, are expected to accept lower margins as they offer significant discounts in order to prevent Amazon from capturing market share.”

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