New research reveals Australians are more likely to stay at home and use electronic devices than dine out, with industry experts saying consumer-focused businesses shouldn’t take customers for granted amid these long-term trends.
According to CommSec chief economist Craig James, author of The New Aussie Consumer, there has been a major shift in consumer trends of late.
“The conventional wisdom is that Australians spend like there’s no tomorrow, are reluctant to save, put purchases on the credit card and love a beer, smoke and flutter. But the stereotype is outdated,” James says.
“Today’s consumer is more likely to spend cautiously, put purchases on EFTPOS than the credit card, more inclined to put money in the bank, less likely to smoke, and more likely to aim for quality rather than quantity when drinking alcohol.”
According to the report, Australian consumers are spending less money on “essentials” as recreational goods become a priority.
“Fifty years ago, 41% of our spending would go on food, clothing, alcohol and cigarettes. Today it is 18%,” the report says.
“In the late 1980s, 1.4% of our spending went on a raft of recreational goods. This includes TVs, cameras, computers and other home entertainment gear as well as sporting equipment and toys.”
“Today, 4.5% of our spending goes on the same items. This is double the spending on electricity and gas, and a third more than we spend on clothing and footwear.”
The report also reveals that alcohol consumption has fallen for the past three years, with current consumption levels on par with those of the mid-1960s.
Beer consumption is at a 62-year low while wine consumption is at a record high. Moreover, price-conscious consumers are purchasing more foreign wine; imports of wine account for around 15% of all sales, up from just 3% a decade ago.
James says it is not surprising to learn that recreation takes a larger proportion of consumer spending than it did in the past.
“But if we are spending more time in our homes with our home entertainment systems and computers, then this is a concern for retailers of all descriptions, including hospitality [businesses] like cafes, restaurants, pubs and clubs,” he says.
“Aussies are no longer going out with the aim to drink. Rather, indulging in a drink is seen as an accompaniment to other activities.”
James says while Generation Y is likely to eat out on a regular basis, baby boomers and Generation X want value for money.
“The share of consumer spending taken by cafes and restaurants fell sharply over the past five years, but may have stabilised in the past year with the advent of food and cooking shows like MasterChef,” he says.
“The bottom line is that retailers and other consumer-focused businesses can’t take Aussie consumers for granted.”
“The ageing of the population will ensure that health and financial services will continue to take larger shares of aggregate consumer spending. Expect traditional retailers to increasingly seek to boost their presence in these areas.”
The news comes as Unilever Australasia chairman Sebastian Lazell says Australian businesses are lagging behind in consumer product innovation.
Unilever develops nutrition, hygiene and personal care products. According to Lazell, Australia’s isolation can often compromise innovation among local businesses.
“The economies of scale are always a challenge in a big country with a small population. So to invest in capital behind innovation here… has been a bit of an inhibitor,” he says.
Lazell says commodity prices are rising so fast that manufacturers cannot absorb higher costs and continue to invest in product innovation for category growth.
“If costs escalate and there isn’t any way of getting some degree of cost recovery, then inevitably… [manufacturers] end up balancing the books by not being able to invest for awhile in areas that are in the vested interests of the Australian shopper and the Australian retailer – good strong brand innovation and brand growth,” he says.
