2020 saw the Australian retail sector swiftly adapt to strict COVID-19 restrictions, and as a testament to their agility, many businesses emerged better than ever.
If there was a shining beacon of hope in 2020 retail spending, it would be the month of November, with ABS retail spending figures recording a staggering 7% increase from the month prior and 13.3% from the same time the previous year.
While much of November’s growth was driven by easing of lockdown measures in Victoria, the rise in spend in all states and territories bar South Australia suggests greater forces were at play.
Record high Black Friday sales and significant growth in online purchases across household goods, clothing and footwear, tech and hospitality spelt good news for many retailers.
With the ABS recording a 4.1% decline in retail spending for December, it seems not even last-minute Christmas shopping and boxing day sales could top the November spending spree.
However, with February now in full swing and the end of summer nearing, retailers are again looking to firm up their end of season sales and new product launches.
This has created the perfect opportunity for retailers to not only reflect on the strategies that sent November spending flying, but to look at how they can capitalise on the evolving retail landscape in 2021.
Environmental impacts on spending behaviours
Not only have Australians begun to spend more again, but they are also changing the way they do it. With international travel off the cards, Australians lucky enough to be working from home have put aside the money they would have spent on commuting or grabbing lunch in the city.
Those living in areas with stringent restrictions have even saved money by cooking and entertaining themselves at home. For many, this has led to a heathier savings account and a more bountiful checking account, giving Aussies the opportunity to add more to their shopping cart than before.
Critically, these purchases were increasingly being made online as result of the lockdowns throughout the year.The shift was most evident in Victoria, with ABS figures for November revealing monthly turnover jumped a staggering 22.4% during their second lockdown, 17.9% greater than the next highest figures seen in Queensland.
Out with the old and in with the new
With online delivery reaching essential status in 2020, consumers were required to move online to manage their payments and a new habit was formed. As the old mantra goes, it takes 21 days to form a habit, and our shift to online spending is testament to this.
Although technology-driven payments were increasing in popularity prior to 2020, the pandemic has acted as the catalyst for an industry overhaul. Those who can visit brick-and-mortar stores are also adopting mobile wallets, conveniently stored on their smartphone to eliminate the need for contacts with PIN pads.
In Australia, the re-introduction of QR codes has also taken the industry by storm, leading to major providers such as UnionPay, PayPal and Eftpos, encompassing QR payment methods into their Australian business models, which will allow Australians to make transactions through scanning a unique code in-store. These payments can help to reduce fraudulent purchases by giving the customer the control – removing PIN codes and physical contact with a business’ POS device.
The growing trend for digital wallets could indicate the beginning of the end for physical payments in Australia, with FIS’ recent Gen Pay report revealing that 56% of Aussies surveyed found mobile wallets easier than traditional methods of payment. As notorious early adopters of new payment technologies, Australians are not shy about ditching the tech that no longer serves them.
The future is digital
It has taken the events of 2020 to forge new habits for Australians, but with the advantages clear for all to see, these changes are here to stay.
The November retail spending figures have shown us what’s possible when retailers respond to evolving consumer trends and provide customers with the right channels to browse and purchase goods – even when faced with a pandemic.
And while the recent December retail spending figures indicate the market remains in a constant flux due to the pandemic, retailers that keep their eyes and ears open to changing conditions and consumer trends have more than a fighting chance to remain competitive and stay ahead of the curve.
Anita LeMaire is managing director Australia & New Zealand at FIS