The gloomy outlook for Australian retailers continues with a new survey showing 46% of consumers are prioritising saving over spending, a figure up 6% on the previous year.
The survey, conducted by management consulting firm The Boston Consulting Group, also showed 54% of consumers are less inclined to purchase new things, up from 49% in the previous year; while 34% of Australians were focused on paying off debt, up 6% on the previous year; and 15% were focused on saving for a house, up 7% on the previous year.
Adding to the tough news for retailers was Australia’s penchant for online shopping, with 51% of Australian consumers spending on overseas-based sites. It found Australia was the leader of developed countries in frequency of online purchases from international sites. Variety of goods and better prices were key reasons cited for this trend.
Conducted in May, the BCG survey tracked 29,785 consumers in 12 countries, with 2502 respondents from Australia. The results showed 47% of Australians believed the economy will get worse in the next six months. Just under one quarter, 24%, believed the economy will improve over the next several years.
It is not just spending, but ‘consumer culture’ that is facing backlash: 78% of respondents found society too focused on consuming, and 45% believed companies are profiting at the expense of consumers.
The BCG head of consumer insight for Australia and New Zealand, Monica Wegner, told SmartCompany this morning that the results were a spike in trends seen building over the last couple of years.
Wegner says consumers showed a shift towards spending in a few key categories such as food, travel and children, looking for quality, durable purchases.
“They are making long-term choices,” she says. “They are spending on items that retain value…such as renovating their houses, or updating their car.”
Wegner says the fresh food industry had been spurred on by improved supermarket offerings of quality goods and cooking shows such as Masterchef.
Wegner says the survey also revealed consumers are projecting a more conservative “appearance” when it comes to spending, unlike the ostentatious shopping of the 1980s.
This is backed by results that show less spending on luxury and fashion goods, lifestyle products and snack foods, Wegner says.
The BCG survey results fall in line with comments from Myer chief executive Bernie Brookes, who told Meet the Press on Sunday that consumers are not responding to lower interest rate cuts. He said it was an “inevitability” that more retailers will collapse before the year is out.
“I’ve had two meetings today with fairly decent-sized businesses, both of which are finding it really hard from a cashflow perspective, finding it really hard from a rent perspective, finding it increasingly hard from a cost of labour perspective and then the added burden of that, of course, is the Australian dollar decline and the ability to purchase product,” Brookes said.
Brookes said that retailers with 10 to 20 stores, particularly in the high-end fashion market, will find survival “increasingly difficult”.
In a similar outcome to the BCG survey, Brookes said recent focus groups had shown consumer confidence was down. The wanted products without delay and were focused on saving.
“The reality is that we’ve got a very frugal, a very difficult customer and one that we have to work harder to please,” Brookes said.
Melinda is a business writer and editor and helps companies to bring their brand stories to life through her small business, Oliver Content. Melinda was previously the content manager for KPMG Australia, an editor of SmartCompany, and spent many years as a journalist.
