More than two in five (42%) Australian consumers have decreased their 2024 holiday spending budget due to inflation, high interest rates, and cost-of-living pressures, according to new research from ShipStation.

Compared to last year’s average spend of $1,000 to $2,000, most now expect to keep their non-essential holiday shopping budget between $200 and $500 — reflecting a 75% reduction.

ShipStation vice president and head of Australia and New Zealand, David Boyer said, “Australians are tightening their belts and becoming more selective with their purchases. We’re already seeing the impact on holiday spending. Average order values have dropped by 4.5% compared to this time last year, with a 9% reduction year-to-date, indicating that many consumers are holding out for peak season promotions to maximise every dollar.”

While Australians are generally spending less, Millennials are set to outspend other groups this peak season based on their estimations. Among Millennials, the top expected spending bracket for non-essential items is $1,000 to $2,000, with 22% planning to spend within this range. Gen Z follows with $750 to $1,000 being the most popular bracket (19%). On the other hand, Boomers are scaling back, with one-quarter (25%) expecting to spend between $250 and $500.

Australians are prioritising discounts and value this holiday season with almost two-thirds (62%) saying sales, discounts, and promotions are the largest factors influencing their participation in peak season shopping. With affordability top of mind, seven in 10 (69%) say they plan to buy cheaper alternatives this year, while one in two (50%) will avoid luxury purchases altogether. 

Thrifting will be widespread with 30% expecting to shop secondhand on platforms like eBay and Depop. Smaller and independent brands are also gaining traction, with one in three (32%) Australians favouring them over larger retailers.

Two in five (19%) are planning to shop via social media platforms — a trend led by Gen Z, with 37% intending to make purchases through social channels. 

With rising carrier costs and margins being squeezed, many retailers are feeling pressured to pass costs on to consumers. However, 73% of consumers expect to pay under $10 on shipping for their purchases and over half (51%) want free shipping on returns for change-of-mind purchases. In fact, 44% are prepared to not shop with retailers who don’t offer free returns.

“Our findings have captured a shift in how Aussies are approaching holiday shopping this year. Savvy retailers who use multiple carriers can compare shipping rates and use their bargaining power to drive down shipping costs, making them more attractive to customers,” Boyer said.

“Retailers who understand their customers and prioritise affordable shipping, flexible return policies, and targeted promotions, will not only capture peak season sales but build lasting loyalty.”