Global Uncertainty Weighing down Australian Consumer Confidence

SYDNEY - Australia’s resilience amidst the current global uncertainty is the envy of many developed nations globally. Yet despite the relative stability of key economic indicators, Australian consumers are increasingly apprehensive about the impact of global issues on the economy and their personal finances.

With confidence sliding in the most recent quarter to its lowest level since the global financial crisis to an interim index of 97 in August (as measured by Nielsen), shoppers are changing the way they spend their money, what they spend it on and where they make their purchases. The legacy of the 2009 global financial crisis has provided many lessons for Australian consumers. With increasing global uncertainty on our doorstep, we are once again seeing these lessons being applied. This change in consumer behaviour is a key driver shaping a rapidly evolving Australian retail landscape.


State of the Nation

Australia is one of the few countries that emerged from the recession of 2008-9 relatively unscathed. With nearly full employment, one might expect Australians to be among the more confident in the world. But if we scratch beneath the surface we witness a number of factors that are darkening Australians’ outlook: unemployment is expected by some analysts to rise, and has done so marginally in July, up from 4.9 percent to 5.1 percent; inflation has risen 0.3 percent  to 3.6 percent in July, causing the prices of basic needs to go up; utility rates are higher; uncertainty about the carbon tax – and its effects on the average household – lingers; massive market fluctuations caused by economic jitters in the U.S. and Europe have made investors nervous, and not least, natural disasters in neighbouring New Zealand and Japan have taken their toll. It’s no surprise that Australian consumers have been rattled and are behaving with an almost recessionary mindset.

Why is this happening?  First, they are saving more; the personal savings rate has increased to 11.5 percent – the highest since 1988. Second, they are looking for new ways to manage their household budgets (see graph above). This has resulted in a number of ‘new’ shopping behaviours:

  1. The average number of store visits is down (exception: online) and shoppers are visiting four or more stores to fill their shopping needs. Whereas before consumers may have visited the most convenient store, they are now shopping around to find the best available offer.
  2. Shoppers are increasingly looking for value, and the major supermarkets are attracting more and more shoppers with promotions, at the expense of convenience stores, independent supermarkets and specialty outlets.
  3. Shoppers are buying more private label goods.


What can retailer do to combat this trend? Read the full article at Campaignasia.com.