A softer than expected Christmas has left nervous retailers banking on Boxing Day sales for a much-needed boost leading into 2017.
On Monday, millions of Australians hit the shops and online stores to snap up the early bargains in what experts said would be some of the deepest discounting in years, thanks to a tightening of discretionary spending in the lead-up to Christmas and the later onset of warmer weather.
Boxing Day shoppers tipped to spend billions
Hundreds of eager shopaholics lined up before dawn to be the first through the doors. (Vision courtesy Seven News Melbourne)
The latter means that high summer clothing that has been sitting on shelves since August has not moved as quickly as needed, leaving retailers no choice but to discount heavily to clear the way for winter stock arriving in early February.
The Australian Retailers Association said Australians were tipped to spend $2.3 billion on Boxing Day, with the total expected to reach $17.2 billion by mid-January, although the department stores' sales run until January 29.
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On Monday, shoppers in NSW and Victoria were expected to spend $661 million and $518 million, respectively.
It was the second year the NSW government allowed trade outside the CBD on Boxing Day and, according to Treasurer Gladys Berejiklian, the decision is likely to stay.
"We can just tell from the support of the community, from the very, very low number of complaints and inquiries we've had, that this will be a permanent fixture," she said.
Brian Walker, CEO of the Retail Doctor Group, said he observed more stores than usual on Christmas Eve with sale signs in their windows.
He said in 2016, there was a fundamental shift in where consumers were spending.
"We saw much more focus on omnichannel retail plus retailers with a differentiated offering. Those that didn't have that were beginning to struggle and Christmas may bring that to the fore," he said.
Looking ahead to 2017, Mr Walker expects some "middle market" retailers to feel the pinch after a tougher Christmas.
"The competition is still intense for the overall [Christmas] spend. Also, in some of the homewares categories there will be some churning in early 2017," he said.
Tony Sutton, executive manager of stores for Myer, said hundreds of people queued outside stores in the early hours of Monday, although trade online was swift on both Christmas Eve, when many sales now launch, and Christmas afternoon.
He said over the course of the sale Myer would aim to clear $150 million in stock, with 21 million people expected to visit its stores.
"Customers shopped a little earlier this year for Christmas, there wasn't a last-day panic rush ... but we are happy with the traffic in our stores," he said.
At Myer, Mr Sutton said people were busy stocking up on "basics", including shirts, towels, sheets and underwear, while a spokeswoman said 150,000 people had visited the Melbourne city store on Monday.
David Jones' regional manager Volkan Ozturk said he was rapt with crowd numbers, which were tipped to reach one million nationally.
"There was a really good crowd outside the [Melbourne] store. Crowds peaked around 1pm-2pm today, you could not see fixtures. There was just a sea of shoppers," he said.
He said there was a lot of "bulk buying" in the menswear department, while swimwear, women's shoes and manchester were particularly strong performers.
Still, shoppers reported smaller numbers than in previous years.
"There are no queues, no waiting to pay and good discounts," said Michelle Barnard-Marks, who arrived at 4.55am and was expecting to have all her purchases completed by 8am.
In Sydney, vehicle queues of up to 10 kilometres formed as shoppers snaked their way to the DFO outlet at Homebush for the sales.
Kate Rooney a centre manager for Emporium Melbourne, said about 190,000 people were expected through its doors on Boxing Day.
"It's a bit early to know what the final sales will be but the retailers are reporting positively," she said, adding that the level of discounting was on par with previous years.
She said the growth of online shopping meant retailers had to proactively court customers with a unique offering and excellent service.
"Our traffic is showing that [online shopping is] not by any means the end of the store," she said.
While pre-Christmas spending was tipped to reach $48 billion, including food, retail and hospitality, consumer sentiment has been stymied by concerns about wage growth, according to NAB.
Its quarterly consumer behaviour report found that while people are feeling less stressed than any time since mid-2012, concerns over income growth are challenging spending in retail.
According to IBISWorld, department stores were set to feel the pinch the most, with pre-Christmas spending down by 2.8 per cent to $117 per person.
With Daniella Miletic, Miriam Webber and AAP