Small retailers say collapsing consumer spending is jeopardising their Christmas orders, making it difficult to obtain fresh stock ahead of the year’s busiest shopping season.
Many Australians are closing their wallets in response to high interest rates and lingering inflation, and the discretionary goods sector is feeling the effect.
Overall retail turnover was unchanged in July, according to the Australian Bureau of Statistics (ABS), but department store sales fell -0.4%, and clothing, footwear, and personal accessory retailing fell -0.5% over the month.
For some, the decline in retail spending was felt deep into August and September — including the Father’s Day sales period, traditionally a boon for specialist retailers.
Jessie Zarubin is the owner of Peregrine Store, a rustic homewares and gift retailer nestled in the Adelaide Hills.
“This is officially the quietest Father’s Day we have ever had,” Zarubin wrote on Instagram Sunday.
“Over 3 days of trade last week – I had 6 people coming into this little shop.”
The sales slump will have a “huge knock-on effect” for Christmas, Zarubin continued, saying that Father’s Day sales revenue in years past was used to secure stock for later in the year.
“The majority of conversations of customers always ends in ‘I’ll be back for Christmas… there’s so many great gifts here,’” she wrote.
“The hard truth is, I just won’t have the stock for Christmas if sales continue how they are… and I imagine so many other little shops are in the same boat.”
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The story is similar over state lines.
Mount Vic and Me is a vibrant retailer of apparel, prints, and self-described “quirky goodies”, located in the foothills of New South Wales’ Blue Mountains.
Founder Kara Cooper shared her own story on Instagram, calling the Father’s Day period “so quiet”.
Speaking to SmartCompany, Cooper says sales in her business do not usually spike around Father’s Day; train replacement buses into the Mount Victoria region may have also deterred daytrippers.
Even so, the underlying sales trends are obvious, both in-person and online.
Year-on-year online sales in August were down 56%.
Like Zarubin, Cooper says the slowdown is forcing the business to make hard decisions in the lead-up to Christmas.
“I don’t know what to stock up on in the lead-up to Christmas,” she says.
“It’s really confusing to know what to do next. We do need to stock up — but how much?
“With sales slowing right down, you don’t want to be stuck with stock at the end of financial year.”
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Part of Mount Vic and Me’s business relies on drop-shipping, making it easier to fulfil customer orders without directly ordering stock.
But the wholesale portion of the business is hurting, too.
“We have lost SO MANY of our wholesale customers across Australia,” Cooper says.
“Each day fills me with dread looking at Instagram and seeing stores across Australia closing their doors — or my favourite brands shutting down.
“I only have a handful of wholesale buyers still buying consistently.”
Paul Zahra, chief executive officer of the Australian Retailers Association, says the sector is “undeniably facing one of its most challenging periods to date”.
“Softened spending habits, rising business costs, a surge in retail crime, supply chain disruptions and other challenges, have made 2024 an incredibly complex year for business owners,” Zahra tells SmartCompany.
And the following months will be critical for retail businesses, beyond Christmas stock-buying decisions.
“We know that traders are eagerly anticipating the upcoming festive period and will be pulling out all the stops to attract new and returning customers throughout the all-important second half of the year.”
Before the festive period rolls around, Australian businesses will also roll through Black Friday and Cyber Monday (BFCM), a shopping festival imported from the United States that has become one of the year’s most significant retail events.
But not every business is able — or willing — to partake in deep discounting around BFCM.
“Asking to discount more and more does nothing for small business already suffering,” Cooper says.
“We can’t compete with big brands!”
Zarubin, of Peregrine Store, urged her social media following to consider stocking up on Christmas gifts now, if possible.
“Start popping things away for your loved ones when you see them in your favorite small shops,” she wrote.
“Support your local.”
And shoppers on a budget can still support small businesses by purchasing smaller items, Cooper says; even sharing an Instagram post or recommending products to a friend could help, she continued.
Despite the recent downturn, Cooper is somewhat optimistic, warning against a sense of total “doom and gloom”.
The arrival of the Western Sydney Airport in 2026 could eventually expose the Blue Mountains region to more tourism, she says, increasing foot traffic to ventures like her own.
“But who will make it through?” she asks.
“And what battle scars will we all have if we do make it?”
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
