By Aimee Chanthadavong
A recent survey shows while Australian consumers may not be spending as much compared to other countries, retailers would be foolish to not find ways to reap on the gaps of where they are spending.
The Boston Consulting Group’s latest survey of consumer sentiment show 46 per cent of consumers prefer to save rather than spend in 2013, which a significant increase from last year’s 40 per cent. This is aligns with the 54 per cent result of Australians who say they feel less inclined to buy new things.
The reason for this is because 47 per cent believe the economy will get worse in the six months compared to only 24 per cent who believe it will get better over the next several years. Also 23 per cent indicated they feel insecure in jobs despite lower unemployment rates than most developed countries.
BCG Australia head of consumer insight Monica Wegner told RetailBiz uncertainty about the future is playing on the mind of consumers.
“Australians are more pessimistic than most countries, which is a bit unfortunate, if say we compare ourselves to the US who seem to sale through with optimism,” she said.
“But to be fair where we were last year to where we are now hasn’t changed much in a positive sense because we still have a political uncertainty, the mining boom has come off and car manufacturers have close. So given that there hasn’t been too much good news, Australians have been hanging for indicators that the future will be more certain.”
Despite this increasing focus on saving, consumers are still spending – but on more selected items. Seventy-five per cent plan to concentrate their spending on a few important categories, such as holidays, fresh food and items for their children. They are also trading up on big-ticket items related to their home and their cars in order to get quality, and durability.
“There are suggestions we are shying away from conspicuous consumption and moving towards a more discretionary trend,” Wegner said.
“It plays on the long term trend people are finding their health and wellbeing, for example, important so are trading up on things like fresh food. But they’re also spending more money on durable items like household appliances and cars, which they like to see as investment because of the longevity of these products. Consumers are less frivolous about their spending.”
As a result, this presents pockets of opportunities for retailers to adjust their range to cater for trading up in fresh food and consumer durables. At the same time, it could potentially address the reasons why Australians are buying overseas online – range, availability and price.
“People will shop local and they will shop bricks and mortar as long as they feel they’re getting a differentiated experience,” Wegner said.
“It’s about them being confident that they’ve got something unique and that’s why retailers have to go beyond providing convenience for customers but also look at range and different ways they can connect in an omni-channel environment. I do believe Australia has an opportunity to innovate in the retail.”
The BCG survey results also showed a decline in trust in retailers over the years, which included information from a retailer’s website, printed material and even advice from a salesperson in-store.
Wegner suggested retailers need to ultimately reach how to consumers in ways they will be willing to listen to, such as reviews and recommendations from peers on social networking sites.
“Overall the trend is people listen to others they know personally and ultimately that’s where retailers have to go. If people are listening to their peers, retailers need to make their information readily available so consumers can get information and give feedback and act almost like an advocacy.”