Expect solid Christmas bargains this year as Australian retailers fear a tough festive season for the sector

• Australian shoppers and retailers alike are expecting another lacklustre Christmas this year, as spending dries up in the economy.

• That could however prove a coup for bargain hunters, with nearly two in five retailers ready to discount items before Christmas.

• On the other hand, pessimistic retailers appear to have written off 2019 as another tough year. On the upshot, they reckon 2020 might finally bring some relief.

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The Christmas season is almost upon us but retailers suspect Santa might be arriving empty handed this year.

After another uninspiring 12 months for Australian merchants, there's not a great deal of festive cheer heading into the silly season, according to the annual Deloitte Christmas survey.

“It’s clearly been a tough year for many retailers, with 47% of our survey respondents telling us they’ve experienced flat or negative sales growth over the past 12 months," Deloitte national retail leader David White said in a note issued to Business Insider Australia.

It's "no surprise" then, he said, that there's little hope things are going to pick up this year.

“Just over 60% are expecting to increase their sales this Christmas, compared to 80% in 2018, and nearly 40% are also expecting to see a decrease in seasonal margins. This is, unfortunately, the most pessimistic we’ve seen retailers since 2013," White said.

While there had been an expectation that Australians would spend half of their tax cut this year, the data shows they've been keeping it to themselves instead – perhaps spooked by falling interest rates and an economy that appears to be faltering rather than firing up. While some retailers are holding out hope it'll find its way into cash registers come Christmas, others are resigned to another lump of coal.

"As always, when to discount and by how much remains a critical decision for retailers over the holiday period. Last year they told us they were intent on holding strong. But with difficult trading conditions 12 months later, this will be challenging, with 39% of retailers planning to discount before Christmas compared to 31% last year, and 30% in early December," White said.

"With the proliferation of sales campaigns such as next week’s Black Friday leading into December, many are concerned this could bring forward Christmas trading at discounted prices.”

Such sentiment can create a hard-to-break cycle. The less consumers are willing to spend, the more pressure retailers feel to discount, the more consumers expect to be discounted before they spend. The latest Westpac survey recorded a 4.5% bounce in consumer sentiment, not enough to reverse the 5.5% drop in October.

"Consumer attitudes towards spending look to be downbeat heading into the all-important Christmas sales period," Westpac chief economist Bill Evans said in a note supplied to Business Insider.

"One in three Australians are planning to spend less on gifts than they did last year, with a further 54% expecting to spend about the same. Just 11% of consumers are planning to spend more this year. The mix is almost identical to last year’s survey and suggests we are heading for another lacklustre Christmas spend," he said.

For its part, the Reserve Bank of Australia (RBA) has stated, in no uncertain terms, lower unemployment and higher wages are the key to turning the ship around. Even it, the great economic optimist, acknowledges it simply can't do it alone, calling for the government to do its part.

“Ultimately, uncertainty kills confidence, and global economic turbulence certainly isn’t helping. Australian retailers will be waiting for a recovery in wage and jobs growth to provide a boost where interest rates and government tax cuts fail to provide the stimulus needed," White said.

It's not all gloom and doom, however. The upshot of all of this is retailers, like disappointed football fans, are reckoning on the promise of a new year. Nearly three out of four are expecting a bounce, although the majority think it'll be a modest uptick below the 5% mark. Just one in ten are planning on opening any new stores.

At any rate, this Christmas looks to already be one retailers are ready to forget.