Research conducted pre-Christmas by the Australian Retailers Association (ARA) and Roy Morgan forecast that spending on pre-Christmas sales would reach $42.1 billion, representing growth of 3.5% on 2012.
The breakdown of this forecast spend was $2.9 billion of sales at department stores, $3.2 billion on apparel, $5.7 billion on hospitality, nearly $5.9 billion on 'other', $6.8 billion on household goods and a whopping $17.4 billion on food.
While the official result will be some time away, the initial feedback from retailers appears to be positive, which suggests the ARA/ Roy Morgan forecast might be in the ballpark. What's more, the holiday period sales aren't over yet, with the Boxing Day and post-Christmas stocktake sales period tipped to bring in a further $15.1 billion as shoppers snap-up discounted bargains.
Despite the positive mood amongst shoppers and retailers alike, there is still the issue of converting positive sentiment into sales. Myer (ASX: MYR) experienced a technical issue with its online shop during Thursday's Boxing Day sales, which caused the website to crash. Whilst obviously not helpful, as CEO Bernie Brookes reminded shareholders, online sales currently make up less than 1% of Myer's overall sales revenue.
As the breakdown of sales shows, department stores such as Myer and David Jones (ASX: DJS) account for a significant percentage of overall dollar spend in the lead up to Christmas. As does the apparel market to which Premier Investments (ASX: PMV) is heavily exposed through its suite of fashion brands including Portmans and Jay Jays.
Investors will also be keen to hear from Harvey Norman (ASX: HVN), which has enjoyed a significant run-up in its share price over the course of 2013, as well as newly listed Dick Smith (ASX: DSH), which will report Christmas sales period results for the first time as a separately listed business.
Foolish takeaway
Discretionary retailing is a cyclical business and the festive season is incredibly important to the overall annual results of many retailers. After a number of years of lacklustre sales results across the sector, a pick-up in sales could see certain retail stocks re-rated by investors.
