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| Survey reveals good news and bad for retailers |
   
| A customer tries on shoes at the new Myer Mackay department store. There are opportunities to grow sales despite tight retail climate, survey concludes. |
Posted Date: 21/10/2011
By Inside Retail
New research confirms a mixed outlook for Australia’s retail sector - but the good news is almost half of consumers say they are maintaining or increasing their spending, and young consumers remain up-beat.
The research, conducted by Sydney-based Research Now for management consultancy firm Growth Solutions Group, shows weak and declining spending by consumers but also indicates there are signs of hope for besieged retailers.
The survey of 1007 respondents found:
- More than half – 61 per cent – believe their purchasing power has decreased in the last 12 months, with just 24 per cent saying it has increased.
- 50 per cent say their discretionary spend on non-essential items has declined, with 28 per cent saying it has stayed about the same and 22 per cent saying it has increased.
- 22 per cent say spending on non-essential items has increased in the past 12 months, with spending growth particularly strong in the 15 to 34-year-old age groups.
- 35 per cent of those surveyed will be spending less this coming Christmas than during Christmas 2010, 36 per cent will spend about the same as last year and only 13 per cent plan to spend more.
- 21 per cent will be spending more online this year than last; and 20 per cent will also be spending less.
- Of those 503 respondents who say their purchasing power has decreased, consumers aged over 35 are feeling the pinch more. Seventy-one per cent (355 respondents) aged 35 to 64 say their purchasing power has decreased compared to 36 per cent (122 respondents) of consumers aged 15 to 34. And more people aged 35 to 64 – 41 per cent – will spend less this Christmas compared to 24 per cent of under 35s.
A vast majority of these respondents, around 64 per cent, blame the increased cost of living for spending less. And almost half – 46 per cent – say they would open their wallets if purchasing power increased. Lower interest rates would be an incentive to start spending more, according to 21 per cent of respondents.
A third also say a better range of products and brands and better customer service would encourage them to increase their discretionary spend at retail outlets.
The survey follows a recent report from Deloitte Access Economics which showed retailing posted its worst results in 20 years in the 2010-2011 financial year.
According to Growth Solutions Group MD Graeme Chipp the key outcome of the survey from a retail perspective is that despite a “doom and gloom” scenario there are people willing and able to spend.
“Importantly, the survey highlights that there are in fact some pockets for optimism and this is where retailers need to better channel their marketing efforts,” he said.
“What the survey shows is that there is, in effect, a three-spend economy that is as significant as the two-speed economy we have heard so much about. There are the young spenders, the middle Australia family handicapped by cost of living increases and very keen to see some mortgage relief and extra cash via lower interest rates, and the mixed spenders and savers at the 65-plus end of the population.
“What retailers need to be asking in the present conditions is how they can drill down deeper and think through how to reach that particular percentage of the population that clearly can be enticed to spend more, or at least maintain spending levels.”
Chipp said the survey strongly reinforces recent discussion and debate about the need for much sharper customer segmentation and creating marketing solutions focused on the mindset of that customer.
“There are clearly very significant differences between what a 25-year-old wants, expects and is willing to pay and a 45-year-old. The writing is now on the wall in terms of being far, far more targeted in order to reach the consumer who is able and willing to spend, and that the line between bricks and mortar and online stores is indivisible, whether retailers like it or not.
“Constant price-discounting doesn’t cut it. If a third of consumers are saying better service would encourage them to spend more, it’s time to directly ask exactly what they mean by this and start making changes. Screaming price and leaving the rest of the journey to the shopper is not going to win.”
Survey respondents complained about a wide range of factors in addition to customer service and the in-store experience, including uncertainty about interest rates, share prices, slowing wages growth, convenience and new taxes.
Chipp said the survey reflected the most recent ABS data which indicated incremental or zero growth during July.
“It seems the reality is that some retailers are hurting severely, others are managing to hold steady, and a few others are enjoying real success stories,” he said. “I would say the differences between them come down to how definitively they have defined the job to be done for their customer and focussed their product offering accordingly.” |
Friday, October 21, 2011 by Salman
The biggest problem retail owners face in Australia is HIGH WAGES! Thats why you dont get any service when you go into A David Jones or Myers store, thats why you find checkouts closed in Coles, Woolworths, Aldi or Crazy Clarks stores! That is why small retailers are closing up because they cant afford to hire people. The Government has its head stuck in the sand when they increase wages every year as instead of helping workers with their cost of living they are putting them out of work because businesses cant afford them!
Friday, October 21, 2011 by Michael J Fox
Four to five trips to Bali per year purchasing homewares for our wholesale business, I can only concour with your report of the lack of and dis-thisinterest shown in our retailing industry relative to SERVICE. Bali staff, wherever we go are so inspiring with their comittment, energy, and professionalism in their "We can do" optism.
Business and shops are well staffed because of low wages affordability, so service is so efficient.
Australia can learn, but affordability and lack of training diminishes this most important component of sales.
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