Coles CEO Steven Cain is expecting Australians to still splurge this Christmas, despite various warnings that retail spending is poised to fall off the cliff.

Deloitte’s quarterly retail report, ‘Retail’s Turning Point’, issued early last month, warns that current record sales figures are artificially bolstered by the current inflation level, and that we are heading for a spending cliff.

In addition, Australian Retailers Association CEO Paul Zahra (pictured below) warns the 17.9 per cent year-on-year rise in retail seen for the July period is being compared to a period when Delta lockdowns closed a lot of physical retail.

Zahra also warns that, even if the spending slowdown doesn’t eventuate, many retailers will not be able to operate at “full potential” due to the staffing shortage.

“Retailers have already begun their recruitment drives for tens of thousands of additional Christmas casuals to cope with demand, however with the scale of the labour crisis getting worse for retail, it’s unlikely that businesses will be able to fill all the roles they have available to trade at their full potential,” he said.

Six rate rises in a row are also likely to impact the Christmas retail season. Analysts from Jarden and UBS are among those warning that the full impact of these rate hikes are yet to hit household cash flow.

Cain told the AFR that Coles Group’s own research suggests otherwise.

“When we did our Christmas research, there were about 10 per cent of customers who said this Christmas is going to be bigger and better than last year because there’s more mobility,” he said.

“We were still in a fair bit of lockdown or restricted travel or fewer planes and all the rest last December. But I think to the extent that there is going to be a pullback in consumer expenditure, it’s more likely to be in January and February.”