Study finds consumers still spending

Posted May 14, 2012 |

In what may surprise many jewellery retailers, a new report by the National Centre for Social and Economic Modelling (NATSEM) and AMP finds that consumers are still spending high on discretionary purchases.

The ‘tight consumer dollar’ has become something of a cliché in discussions about the outlook for retailing in Australia, as many perceive the global financial crisis, unemployment, petrol price increases and more to have choked expenditure in the last decade.

The ‘Prices these days!’ report by AMP.NATSEM however, presents a different story, finding that the average household is ahead by $224 per week compared to 1984.

The report considered the rise in costs of food and housing as well as the rise in wages, which outpaced inflation, and the decline in the price of technology.

While costs like electricity (+253 per cent), mortgages (+253 per cent) and rent (+223 per cent) have risen substantially since 1984, technology has decreased in price (-8.1) and electrical appliance prices have remained unchanged in nearly three decades.

Combine this with average after tax disposable income growing by 45 per cent and a new picture of the Australian consumer starts to emerge, one of a shopper who is spending more on discretionary purchases than ever before, while still bemoaning the cost of living.

“Every year the perception seems to be that it gets harder to afford the basics,” AMP Financial Service managing director Craig Meller said. “Maybe it’s not the cost of living that’s soaring out of control, but rather our aspirational selves telling us we need more.”

The study doesn’t nullify retailers’ concerns that the sector is in trouble, however. Consumers may be spending, but they are spending in different ways and different places, including online.

Anthony Bates, custom design jeweller at Melbourne store Tishe Fine Jewellery, explained that online jewellery shopping has changed the retail industry, but retailers need to adapt.

“You’ve got to compete against the internet, that’s the most common gripe,” he told Jeweller, “but we should remember that every type of retailer is going up against the internet. We can moan or we can just get on with it, be competitive, and design your sales pitch to discourage internet purchasing.”

Bates affirmed that the onus is on the retailer to realise that there is still money being spent on discretionary purchases like jewellery, and not dwell on a perception that the market is shrinking.

“We need to get everybody to stop moaning,” Bates said. “You have to adapt and embrace change or you’ll become a dinosaur. Harking on about how it was or ‘I remember when’s’ is pointless. The focus needs to be on how the current and the next generations will be and are purchasing, and supply that demand.”

Do your experiences as a retailer (or supplier) differ to or support the findings? With such a provocative result, Jeweller is analysing the AMP.NATSEM study with the aim of reporting how jewellery retailers can gain a bigger slice of the discretionary dollar. We’d like to hear your comments. Email: editorial@jewellermagazine.com.

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