A new survey of the spending habits of Australian shoppers suggest the GFC might have led to a permanent shift in consumer behaviour, where customers only spend when they think they can get a bargain and retailers will be forced to be permanently “on sale”.
The annual Eye on Australia survey produced by advertising and communication firm Grey and Sweeny Research, was based on a survey of 998 shoppers.
While the headline stats show Australians have emerged from the downturn in good spirits – the proportion concerned about economic conditions has fallen from 36% to 25% and worries about personal finances have also fallen sharply – there is an underlying shift towards a frugal approach to life.
The proportion of respondents actively trying to reduce debt hit 85%, while 76% said they actually enjoyed saving money. The proportion of respondents living “week to week” fell from 41% to 35%.
The chairman of Grey Australia, Paul Gardner, says the worrying statistic for retailers is the measure of women aged 45-56 years who are extremely or very satisfied with life, which fell from 45% to 31% despite the recovering.
“This is the least satisfied of any group in Australia and they are also the biggest shoppers,” Gardner says.
Gardner argues that these women are now spending more time watching the family budget, a fact supported by their attitudes to home brands: 40% claim to be buying house brands more often and 62% say the quality is as good as regular brands.
Perhaps as a result of the rise of home brands (a trend the grocery giants have been good at exploiting), almost half of all respondents said their favourite brands are disappearing and 41% of respondents believe there is less choice in supermarkets than there were 12 months ago.
Gardner says there is always some hangover of frugality among consumers following a downturn, but what makes him think this is more of a permanent shift is that fact the economic conditions are actually very positive.
“The difference is that in the past frugality has comes with a fear of unemployment. Yet this time people are not worried about losing their jobs.”
Gardner feels the retailers themselves may be to blame. After discounting strongly and regularly throughout the downturn, customers have been conditioned to hunt for bargains and expect retailers to be almost always on sale.
That’s made it difficult for retailers to extract maximum out of traditional peak times such as Christmas, Gardner says.
He predicts a surge in “brand” advertising in the coming months as businesses attempt to re-establish their connection with customers and move away from pushing discount offers.
“They need to go back and justify why they are charging.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
