Australian retailers look set to be battered by one of their worst Christmas seasons since the global financial crisis, as consumers shift away from traditional gifts to experiences and donations.
Plunging consumer confidence and $25 billion worth of tax cuts have done little to send people back to the shops, but bricks and mortar retailers are being hit on two fronts as the slow economic growth combines with a fundamental shift in consumer preferences.
Pre-Christmas consumer confidence is now at its lowest since 2008, according to the latest ANZ-Roy Morgan Consumer Confidence survey. GST revenue is down by more than $550 million on what was expected in the federal budget.
Commonwealth Bank chief economist Michael Blythe said the bank’s household spending intentions survey showed a reluctance by consumers to spend on goods and a trend towards spending on experiences such as travel and entertainment.
“The weakness in the indicators is centred on spending on goods, which continues to track sideways at low levels. In contrast, spending on experiences is generally trending higher,” Mr Blythe said.
“Entertainment spending intentions are rising quickly. Travel spending intentions are inching higher.”
We’ve heard from some people who are planning to put [a bushfire appeal donation] into a Christmas card and leave it under the tree.Vinnies NSW acting chief executive Yolanda Saiz
Reflecting the change in consumer preferences, the Australian Bureau of Statistics has updated its measure of inflation to give greater weighting to recreation and culture, while downgrading furnishings, clothing and footwear.
Consumers’ move away from material gifts is also backed up by data from major experiential gifting company Redballoon, which has had a 10 per cent increase in traffic in December alone, and an 88 per cent rise in Australians searching for experience-related gifts.
Fellow events company Eventbrite has also reported a pre-Christmas bump, with the company estimating almost 90 per cent of Australian shoppers will spend a quarter of their income on live experiences over the next year.
Similarly, international travel has appeared at the top of shoppers’ Christmas lists, with group travel company Intrepid marking a 17 per cent increase in end-of-year bookings.
But with catastrophic bushfires ravaging the country’s east coast and fire crews desperate for funding, a growing number of shoppers are shying away from gifts altogether.
Local charities collecting for bushfire appeals said they had heard of numerous people giving donations instead of presents this year.
“We’ve received great support from the community, with people telling us they are making donations to the Vinnies Bushfire Appeal as a Christmas gift for family and friends,” Yolanda Saiz, acting chief executive of Vinnies NSW said.
“We’ve heard from some people who are planning to put the donation receipt into a Christmas card and leave it under the tree.”
That’s the plan for Gold Coast marketing manager and sustainability blogger Larissa Tedesco. An advocate of sustainable gifting, she’s suggested to her friends and family that they make bushfire donations this year as gifts.
“I feel like it’s very selfish to go and buy things that are quite superfluous rather than actually helping people that might be in need,” she said.
“We don’t necessarily need 10 gifts under the tree, I think that’s totally unnecessary.”
She believes the smoke haze covering much of the country’s east coast has served shoppers with a wake-up call to be more thoughtful this holiday season.
“I think people are considering their priorities a little differently this year.”
But market-watchers believe a change in habit could be short-lived, with Indeed economist Callam Pickering believing the turnaround in the property market could lead to an increase in spending on goods in the new year.
“Real estate and financial services will benefit directly and retail may benefit indirectly via the wealth effect,” he said. “Higher property values boost the assets of millions of Australians, and economists believe that makes them more likely to consume goods and services.”
Ms Tedesco is cognisant of the negative impact to business a broad switch to sustainable gifting could cause but believes this is something shopkeepers will be forced to face, saying it’s “far-fetched” to expect constant, year-on-year growth.
“Always expecting to see more growth and more money coming can form a very dangerous cycle,” she says.
“Climate change is real. We can see the bushfires happening right now, and it’s the price for the destruction that we’ve been causing for the past 50 years.”
Source: Thanks smh.com