Australians set to hoard cash for another 12 months: Study

One in two Australians plan to reduce discretionary spending during the next 12 months, with conservatism outstripping that seen in the debt-laden US according to a new survey. 

A Boston Consulting Group consumer sentiment report showed 48% of Australian respondents planned to cut their spending over the next 12 months compared with 10% who plan to increase spending. Forty-two percent of local respondents said they would keep spending at a steady rate.

Australians’ reluctance to splash cash is matched only by those in Greece, where 53% said they intended to spend less and the UK at 50%.

James Goth, leader of BCG’s consumer practice in Australia and New Zealand, says while Australia’s spending intentions are bearish retailers have an opportunity to smarten up their offerings and marketing.

“There are no indications that there’s any significant change in intentions ahead,” Goth says, tipping that spending might not return to pre-GFC levels for another three to five years.

“So for companies in the retail sector overall it’s not great but that doesn’t mean that individual companies can’t grow,” Goth says.

He says businesses should look at segmenting their consumer base and working out how they can better serve different markets.

Goth says BCG’s research highlights a shift in values from “conspicuous consumption to conscientious consumption”.

“It’s not just about the hip pocket, it’s about it being ethical to not waste money and those that are spending up are doing so for ethical reasons rather than for status,” Goth says, pointing to sections of the Australian market that continue to buy green products despite their higher prices.

“The GFC has led to a shift in attitudes in spending and an element of that is a shift from carefree spending,” he says.

The most recent official retail figures showed sales fell by 0.6% in May this year after a 1.2% rise in April and a 0.4% fall in March.

The 2011 Global Consumer Sentiment report, which surveyed 24,000 people including 1400 in Australia, showed that 47% of Australians said they had been personally affected by the economic downturn.

While lower than rates in the US it is greater than debt-laden Japan and similar to European countries.

Forty-five percent of Australians said they were feeling anxious about the future, compared with 77% of Spaniards, 69% of Italians and 52% of respondents in the US and France.

When asked how secure they felt in their current job for the next 12 months 4% said very insecure and 13% said somewhat insecure. Twenty-five percent said they were not financially secure and 6% were reported to be in financial trouble.

The report showed that 48% of Australians had increased purchases of private label brands versus 43% who haven’t changed and 9% who have cut back.

The survey showed which products are capturing more and less of our dollars, with spending on mobile phones, confectionery, fast service restaurants and soft drinks falling by more than 60%.

On the other hand, 35% said they were spending more on travel and holidays and 28% said they were spending more on fresh food. Spending on baby food and baby care products, and on the home also increased.