Australian consumers are reporting increased holiday spending this year, largely driven by rising prices rather than increased optimism, according to new research. The average spend is set to climb to AUD $969 per shopper, an increase of almost 18% compared to last year's figures. More than four out of five Australians expect to spend the same or more than they did last holiday season.
Spending trends
The biggest spenders appear to be younger millennials, aged between 28 to 35 years, who expect to outlay AUD $1,243. Older millennials, in the 36 to 43 age group, are anticipating expenditures of around AUD $1,059. Half of respondents attributing their increased seasonal spend to the rising cost of goods and services, while just over a third pointed to a desire to treat themselves and others.
When asked about their strategies for coping with higher costs, 58% of those spending more said they would shop around for sales, look for promotions and compare prices, while 53% planned to buy gifts in advance to lock in better deals.
Shopper challenges
Australian consumers also reported significant stress around holiday shopping. Nearly four in five said the process of purchasing gifts could become so overwhelming or frustrating that they have abandoned their shopping carts entirely. The sense of being swamped by advertising and too many choices was cited as the main reason for this "shopper stress". Among younger generations, the effect is even more pronounced, with 87% of Gen Z and 86% of younger millennials likely to walk away from potential holiday purchases.
Many shoppers are also concerned about making the right purchasing decisions, with 78% worrying they might regret their choices later.
Rise of AI tools
The use of generative artificial intelligence (AI) is gaining significant traction among Australian holiday shoppers. Nearly three in five consumers report they are already using generative AI tools, with two-thirds planning to rely on them for decision-making during the holiday season. These AI tools are primarily used to summarise product reviews, compare product features, create shortlists of places to buy gifts, and track price changes, each cited by around 41%-43% of shoppers using the technology.
For Black Friday and Cyber Monday planning, 28% of consumers expect to use conversational or generative AI tools. However, only 17% anticipate using one offered specifically by a retailer or brand for tailored advice. Traditional online research, including browsing websites, reading reviews, and checking forums, remains popular, especially among baby boomers-55% favour these channels compared to only 9% willing to use generative AI.
In-store experiences
Many consumers continue to value the in-store experience during the holidays as a counterbalance to online shopping fatigue. Half the shoppers surveyed said they would seek out physical stores for clarity, inspiration, and connection. For 42%, the ability to see and touch products in person drives their decision to shop offline, while a third are motivated by the festive in-store atmosphere.
Department stores, supermarkets, and discount retailers remain popular destinations, cited for providing convenience and value under one roof. Half of consumers said they were looking for special in-store promotions or product launches.
Retailer response
"To succeed this holiday shopping season, retailers should focus on three key strategies. First, every touchpoint, online or in-store, needs to add clarity, remove hesitation and reinforce confidence. This includes shifting from search engine optimization to generative engine optimization for better AI visibility, using natural language, almost in an FAQ-style, for product attribution, and maintaining consistent messaging across channels. Second, build gen AI as a trusted shopping companion that guides customers and curated experiences, interpreting emotion and context to make recommendations feel personally relevant. Third, strengthen human connections and in-store experiences by creating festive ambience and offering exclusive offerings, while empowering frontline staff with AI-powered tools and training to enhance their roles and help them deliver consultative customer experiences," said Nhung Mason, Managing Director, Products Group Lead, Accenture ANZ.
"Retailers will need to display ever greater levels of agility and responsiveness as they navigate challenging headwinds. In a season routed in nostalgia, retailers can take heart that despite financial pressures, shoppers are still planning to treat themselves and others, with many planning to visit bricks-and-mortar stores for human connection, inspiration and to soak up the festive ambience. These are memory making moments that have potential to last well beyond the holidays. By taking thoughtful steps to help shoppers find real value and supporting experiences that feel good in-store and online, retailers have an opportunity to turn holiday shopping into what it's meant to be: a rewarding experience for consumers, employees and organizations alike," said Mason.
