Turning a rising rates economy into opportunity: Peak Sales Season 2023

Q3-2023 Digital Economy Index Summary:

• Airwallex’s Q3-2023 Digital Economy Index shows Australians’ online spending has dropped 5.07% year-on-year (YoY)

• $2.9 billion dip driven by downturn in retail and e-commerce spending

• 12% increase in travel spending highlights Australians willing to dip into an estimated $250-300 billion in accumulated savings as retail sales season looms

Retail spending in decline

It’s nothing new to businesses that operating in the current economic climate poses considerable challenges.

In this edition of the quarterly Airwallex Digital Economy Index which records YoY and quarter-on-quarter (QoQ) snapshots of the digital economy by state and industry, the Airwallex team found that a spending downturn in the retail and e-commerce sector drove a $2.9 billion year-on-year Australia-wide drop in online spending. 

The Index highlights that online spending has dipped YoY across all sectors: 

• 1.29 per cent for the digital and technology sector

• 7.00 per cent for the education sector

• 7.90 per cent for insurance and self-managed investments 

• 8.02 per cent for retail and e-commerce

Notably, online travel spending has been spared the downturn, recording 12.75 per cent growth YoY and 6.49 per cent since Q2.

The consistent factor leading to the decline in each state was retail spending, with travel spending in Queensland helping make that the only state not to record a YoY decline in the Index. 

But what does this mean for the retail sector as a whole as we brace ourselves for the peak sales period?

Cost, control and efficiency

Airwallex’s Australia and New Zealand Vice President of Growth, Matt Sek, said the upcoming Q4 would typically see an upswing in digital spending as Australians take advantage of the peak sales season. 

“Official data shows Australians have collectively around $250-300 billion in their savings accounts. Savvy businesses will seek ways to maximise the upcoming sales season to get customers spending again,” Sek said. 

“Australians have been spooked by the economic environment over the past 12 months but as things have stabilised we can see they’re taking the time to do their research and hunt for the best bargains before they part with their hard-earned cash.”

In recent times at Airwallex, we’ve heard more than ever that cost, control and efficiency are top priorities for businesses who are looking to operate in the current economic climate. 

We’re particularly seeing an increase in interest in the way businesses accept payments and how they manage multiple currencies to navigate the tough economic environment. It’s not all doom and gloom, and this is where Airwallex can help. 

Take Poppy Lissiman for example, the eponymous brand famous for its high-quality, eye-catching and cruelty-free accessories that are all made using faux leather materials, and fabrics made from post-consumer plastics - and loved the world over.

“Traditional banks tend to have high fees for foreign exchange, along with a less user-friendly online portal. Airwallex offers a low exchange rate and links directly into Xero, making it flexible and easy to use – and it’s become absolutely essential in keeping our costs down,” said Skip Lissiman, CEO.

Beyond peak sales - an Airwallex first

This October, in support of retailers and timely with the release of our Q3 Digital Economy Index, Airwallex is hosting its first-ever summit of retailers and online businesses. 

The goal is to look at the impact of recent consumer spending trends and discuss ideas and solutions to the challenges retailers are experiencing during the upcoming peak sales season.

The 250-person event for retail professionals also features Airwallex partners including Afterpay, Wayflyer, Refundid, Elephant Room, BigCommerce, Marketplacer and Shipbob. 

“There’s a sense of optimism that the signs are there for a spending turnaround and online businesses are keen to learn how they can replicate the success and resilience in spending the travel sector has seen,” Sek said.

“The businesses that do the best over the next three months will be the ones that find the savings and efficiencies in their cost base to offer the sorts of discounts and deals Australians are used to during peak sales season.”

You can find out more about Airwallex’s approach to Black Friday and beyond here.