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Father’s Day spending is expected to hit $735 million this year, and while that’s a small increase on 2021, the figure is almost 8 per cent lower than what was previously forecast.

Australian Retailers’ Association chief executive Paul Zahra said the drop in spending forecasts is not surprising.

“The concern is with inflation yet to peak, and cost of living challenges likely to worsen before they get better, consumers will be squeezed even further when it comes to their discretionary purchases,” he said.

Investors and analysts will get a better view of the overall spending outlook over the next two weeks as the country’s largest retailers start to report their 2022 financial results.

The lead-up to earnings season has sent mixed messages to investors, with companies like Myer and JB Hi-Fi previewing strong profits off the back of continued sales momentum, both in store and online.

Analysts will be listening closely for comments from executives on what spending will look like in the near future. A recent spate of earnings downgrades from major US retailers is being taken as an indication that a slowdown could be coming.

Companies like Walmart have warned inflation is forcing shoppers to spend more on household necessities and less on discretionary products - a trend which could also play out in Australia in the coming months.

“We remain cautious regarding trading for Nov-22 onwards as the cumulative impact of cost of living pressures will have a greater impact, plus the expected return of the full fuel excise,” the equities team at UBS said in a note to clients last week.

There’s some evidence of bright spots for businesses if they can position themselves well, however. The rise of the circular economy and the search for value suggest that many shoppers are making purchasing decisions with long-term value in mind.

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Last week Australian eBay boss David Ramadge pointed to the strength of the second hand luxury goods market on the marketplace platform, including growing sales of Chanel bags. Meanwhile, more than half of those surveyed by the Australian Retailers’ Association this month said they want to buy Father’s Day gifts that are environmentally friendly.

For Kirby, the hope is that shoppers will look to spend their cash with retailers in their local communities – a trend he saw play out last year and hopes will continue.

“It [spending locally] definitely goes a long way for small business and it’s rewarding for customers. I saw more of that last Christmas, for sure.”

Despite the big task of competing with larger retailers, Kirby says he’s confident in Urahara’s offer - and is taking a long-term view.

“It has been really challenging, but I’m very confident and happy to stay the course.”

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