A new ARA-Roy Morgan report predicts double-digit growth for hospitality spending pre-Christmas. It’s expected on-premise spending will rise by 12.3% to $8.16billion – welcome news for a sector that has been devastated by COVID-19 lockdowns.

The ARA-Roy Morgan 2021 pre-Christmas Retail Sales predictions forecast that overall spending will come in at $58.8 billion, virtually unchanged on last year, but up 11.3% on pre-pandemic conditions. 

Roy Morgan CEO Michele Levine said: “Our sales forecasting reveals a country on the move; a consumer economy exhibiting all the signs of pent-up demand.

“No one believed that spending this coming Christmas could match the highs of last year, but as the population emerges from the most punishing crisis in a hundred years, shoppers are looking to reward themselves and their families.

“The sales aren’t all going to be instore, however. The COVID five-year digital acceleration means many more Australians are shopping online, so this Christmas we will see much more of a mix between in-store and online shopping.”

ARA CEO Paul Zahra added: “There’s a lot of Christmas cheer in these numbers, with the overall trend looking positive, and that is great news for small businesses and discretionary retailers who have suffered through some of the longest lockdowns in the world this year. The Christmas trading period is critical as it’s the time when most discretionary retailers make up to two thirds of their profits for the year,”

“Although the ARA-Roy Morgan data predicts the impact of COVID lockdowns will continue to suppress retail sales, year-end spending in NSW and Victoria will bounce back strongly in December. And those states not impacted by lockdowns will enjoy a more gradual ramp-up in sales growth leading into Christmas. The overall trend is looking positive.” 

The Roy Morgan data also values (for the first time) the impact of the most recent lockdowns on retail trade at $131 million per day across the economy. 

“Unsurprisingly, these impacts have been most keenly felt in NSW and Victoria, at $40.4 million and $55.2 million per day respectively. And it’s also unsurprising that the most impacted categories were hospitality and clothing, footwear and accessories, at $71.7 million and $55.7 million per day respectively,” Zahra said. 

“These impacts will continue to weigh on annual growth in retail trade and will be compounded by the reduction in Government stimulus payments and the end of ‘mortgage holidays’ for tens of thousands of Australians in the coming months. We also have to remember that the sector is cycling some very high numbers off the back of a bumper Christmas last year. 

“Overall though, the outlook is positive in the lead-up to Christmas and there’s a lot to be cheerful about in this years’ predictions. 

“With elevated online sales, suppressed shopping demand, global supply chain disruptions and local delivery issues, the key message to consumers for this Christmas ‘tis the season to shop early.” 

PayPal usage soars to record high during COVID-19 pandemic

The latest Roy Morgan Digital Payments Report shows 15.7 million Australians aged 14+ (74.2%) are aware of online payment platforms such as PayPal, Visa Checkout, masterpass and Western Union.

Of the four leading online payment platforms PayPal is the clear leader with 72.5% of Australians aware of the platform. This compares to just under a quarter, 23.6%, that are aware of Visa Checkout, and just under one-in-six aware of Western Union (16.4%) or masterpass (16.3%).

The COVID-19 pandemic has provided a huge boon to online retailers, and this has also driven the increased usage of online payment platforms such as PayPal. Now 47.3% of Australians have used PayPal in the last 12 months, up nearly 10% points from 37.8% in February 2020 just before the pandemic hit Australia – reversing the trend.

Usage of PayPal had been at 40.5% of Australians in January 2018 and gradually increasing before peaking at 42% in June 2018. From mid-2018 usage of PayPal had begun to gently decline as newer forms of payment such as buy-now-pay-later services gained an increasing share of the digital payment market.

Over three-quarters of Australians, 16.5 million (78.1%), are now aware of buy-now-pay-later services such as Afterpay, Zip, Latitude Pay and Humm. However, usage of these services is far lower with only 3.5 million Australians (16.6%) using a buy-now-pay-later service in the last 12 months.

Roy Morgan CEO Michele Levine said: “The proliferation of digital payment services in recent years is profoundly changing the way Australians conduct financial transactions and pay for goods and services.

“Often referred to as ‘fintech’ – the union of finance with technology – these new services include buy-now-pay-later services led by Afterpay, contactless/cardless mobile payment services such as Apple Pay or Google Pay, wearable payment devices such as fitbit pay, banks own mobile payment services such as Commbank Tap & Pay and even cryptocurrencies like Bitcoin or Ethereum.

“However, despite the multitude of options now available for consumers PayPal stands out as the leading digital online payment platform used by 47.3% of Australians in the last 12 months. PayPal is ahead of second-placed bill payment service BPAY used by 42.7% of people largely to pay bills and both are well ahead of third-placed Afterpay used by 13% of Australians.

“The onset of the COVID-19 pandemic in March 2020 drove people to purchase goods online and led to a steep increase in people using the PayPal online payment platform which increased by nearly 10% points since February 2020. This is the largest increase during the pandemic for any of the many digital payment services now available.

“As a more established digital payment service PayPal has been facilitating the online purchase transactions of Australians for nearly twenty years. This longevity in the market leads to high penetration for PayPal amongst key demographic groups – over 55% of people aged 35-49 used PayPal in the last 12 months – higher usage than any other age group.”

With the annual Roy Morgan forecasts on pre-Christmas retail spending showing Australians are set to spend $58.8 billion in the pre-Christmas period this year and a recent Roy Morgan survey showing Australians are predicting an average of 48% of their Christmas gift shopping will be done online, Levine said these results show the next few months are set to break new ground with a record level of online sales and heavy utilisation of digital payment services.

“PayPal has been a big winner of the move to online so far during the pandemic and over the next few months we will be keeping a close eye on whether PayPal can hold onto the gains it has made over the last 18 months or whether rival digital payment services such as Afterpay can close the gap as we enter ‘COVID-normal’,” Levine concluded.

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