Australians are tipped to spend a record $1.3 billion on Boxing Day alone, driven by more people shopping due to stronger migration, as well as higher prices.
The Australian Retailers Association and Roy Morgan have forecast this year's Boxing Day will see an increase of 1.8 per cent in sales from last year.
The shopping spree is also projected to continue steadily into the new year, with shoppers forecast to spend $24.7 billion from December 26 (Boxing Day) to January 15, 2025, up 2.6 per cent compared to the same period last year.
Fleur Brown is the chief industry affairs officer at the Australian Retailers Association. (Supplied: Australian Retailers Association)
"These post-Christmas figures show there remains a healthy appetite from Australians to make the most of Boxing Day sales," Fleur Brown, chief industry affairs officer from the Australian Retailers Association, told the ABC.
"It's a little down on the growth that we've seen across the peak season, pre-Christmas spending, but still a decent result in a really challenging economy."
Ms Brown said more people spending and prices going up were behind the record-breaking number.
"Australia has seen some pretty strong growth in population, and that's swelling the figures," she said.
"We are seeing prices rise across the board due to inflation. Supply chain cost increases would be reflected in that spend as well. Retailers do need to pass on costs that they get from overseas suppliers, transportation, wages, electricity, fuel, insurance, the whole thing.
"It is great to see that we're still seeing growth in a really tough economy. However, it's not necessarily growth that's keeping up pace with inflation."
Australia's economy recorded its weakest annual growth rate in decades in the September quarter, outside of the pandemic, rising by 0.3 per cent in the quarter and 0.8 per cent over the year.
'A deeply tough year' and changing shopping patterns
The industry peak body says it has been "a deeply tough year" for retail due to challenging economic conditions.
"Across the board, we've seen pretty modest year-on-year growth," Ms Brown said.
"Small business in particular is really hurting, and we have seen quite a lot of businesses closing or talking about closing."
She added retail crimes had also hurt businesses' bottom lines and wellbeing.
Adelaide Timbrell is a senior economist from ANZ. (ABC News: Kristian Silva)
Some economists have observed that many Australians have brought forward their Christmas shopping this year due to Black Friday-Cyber Monday sales.
"Black Friday has increasingly pulled forward spending from December to November for discretionary retail goods," ANZ senior economist Adelaide Timbrell told the ABC.
"According to ABS retail sales data, the share of Q4 retail sales by household goods, fashion and department stores that occurred in November has risen from a range of 29.2 to 30.6 per cent in 2000-2015 to 33.3 per cent in 2023.
"December's share of Q4 retail sales in these categories has fallen from a range of 41.2 to 43.0 per cent in 2000-2015 to 38.7 per cent in 2023."
The latest official figures from the Australian Bureau of Statistics (ABS) showed retail spending rose by 0.6 per cent in October, while spending increased by 3.4 per cent in the year to October.
The ABS noted that sales events have started to leak into October as some retailers were "enticing buyers to spend early with discounting, particularly on discretionary items".
Could lower interest rates rejuvenate the sector?
Australia's cash rate remains at 4.35 per cent, and while headline inflation (2.8 per cent) has fallen within the Reserve Bank's target band of 2 to 3 per cent, core inflation remains at 3.5 per cent.
That has curtailed consumer spending, especially discretionary spending. And that's a reason some high-profile retailers, including Mosaic Brands and Dion Lee, collapsed this year.
Stella Ong is a market analyst at share trading platform Superhero. (Supplied: Stella Ong)
Despite that, market analyst Stella Ong from share trading platform Superhero, says there are some bright spots in the sector.
"The retailers that outperformed were those focused on either the essentials or low-cost alternatives," she told the ABC.
"Wesfarmers, for example, owner of Kmart and Bunnings Warehouse, posted its highest sales since the onset of COVID-19. Kmart especially shined as the star performer, delivering record earnings with a 25 per cent year-on-year growth.
"Despite focusing on more discretionary items, electronics and entertainment retailer JB Hi-Fi also exceeded analyst expectations thanks to its low-cost business model similar to the US' Best Buy."
The retail sector sees its fortunes tied into interest rates and hopes that it could benefit from expected interest rate cuts in 2025.
"I anticipate between one to two rate cuts next year," Ms Ong said.
"If these expected cuts take effect, consumers may feel more confident to treat themselves and splurge on indulgences.
"Discretionary retail segments — fashion, luxury, dining and entertainment — should witness a surge after a period of weakened sales. Although cautious optimism remains prudent, this breath of fresh air could reignite consumer confidence."